Debt consolidation
See how simplifying your debt can help you save more each month.
Get a fresh start on your finances
Consolidating debt could be the first step toward a brighter future.
- Lower your monthly payments
- Leave high interest behind
- Make room for bigger dreams
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Connect with an expertDebt consolidation resources
Consolidate debt & save
Start the year fresh by using home equity to consolidate debt and ease into a lower rate and payment.
Home equity loan for debt consolidation
Learn how a home equity loan can help consolidate debt and reduce interest costs.
Cash-out debt consolidation
Learn how to consolidate debt by rolling high-interest balances into your mortgage.
Consolidate debt & save
Start the year fresh by using home equity to consolidate debt and ease into a lower rate and payment.
Home equity loan for debt consolidation
Learn how a home equity loan can help consolidate debt and reduce interest costs.
Cash-out debt consolidation
Learn how to consolidate debt by rolling high-interest balances into your mortgage.
How to use the debt con calculator
Debt consolidation calculator uses
On this page
Debt consolidation calculator uses
A debt consolidation calculator is a helpful tool when you're trying to decide whether using your home equity could make financial sense. Use it to:
- Compare your current debt payments to a consolidated loan: Enter your existing balances, interest rates, and monthly minimums alongside potential home equity loan or cash-out refinance terms to see how they compare.
- Estimate your potential monthly savings: See whether combining credit card debt, personal loans, or other high-interest balances into one payment could lower your monthly obligations.
- Compare a Home Equity Loan vs. a Cash-Out Refinance: Both products let you tap your home's equity to consolidate debt. The calculator helps you see which option might better fit your financial goals.
Debt consolidation formula
How we estimate your monthly savings
Our calculator estimates your potential monthly savings by comparing what you pay today to what you could pay after consolidating your debt with either a Home Equity Loan or Cash-Out Refinance.
For a Home Equity Loan, we compare your current monthly debt payments to your new Home Equity Loan payment while keeping your existing mortgage.
Monthly Savings = Current Debt Payments − Home Equity Loan Payment
For a Cash-Out Refinance, we compare your current mortgage payment plus your monthly debt payments to one new mortgage payment.
Monthly Savings = (Current Mortgage Payment + Current Debt Payments) − New Mortgage Payment
To estimate your new loan payment, we use the standard amortizing loan payment formula:
M = P × ((r × (1 + r)ⁿ) ÷ ((1 + r)ⁿ − 1))
Here's what each variable represents:
- M: Monthly loan payment
- P: Principal (the amount you're borrowing)
- r: Monthly interest rate (annual interest rate ÷ 12)
- n: Loan term in months
Example
Let's say you have:
- Current mortgage payment: $1,700/mo
- Credit card payment: $450/mo
- Personal loan payment: $245/mo
- Medical debt payment: $100/mo
Your total monthly payments today are $2,495.
If you consolidate $27,000 of debt:
- A Home Equity Loan with an estimated payment of $262/mo would reduce your debt payments from $795/mo to $262/mo, saving approximately $533/mo, while keeping your current mortgage.
- A Cash-Out Refinance with a new mortgage payment of $1,890/mo would replace both your current mortgage and debt payments, saving approximately $605/mo overall.
Keep in mind
Monthly savings are only one part of the decision. A lower monthly payment may come from extending your repayment term, which could increase the total interest paid over time. Compare your monthly payment, interest rate, loan term, and total borrowing costs before deciding which option is right for you.
How is the Rocket Mortgage debt con calculator different?
There are a lot of debt consolidation calculators out there. Here's what makes ours different:
- Estimates built for home equity: Most generic calculators only compare loan rates. Ours is designed specifically to help you weigh a Home Equity Loan or Cash-Out Refinance against your existing debt with results that reflect how Rocket Mortgage actually works.
- Real options, not just estimates: When you're ready to move beyond the numbers, we can connect you with a Home Loan Expert who can review your actual equity, credit profile, and debtbalances to give you real numbers.
- Comparison: See both your Home Equity Loan and Cash-Out Refinance estimates in one place so you can choose the path that fits your goals.
Debt consolidation terminology
Key terms to know when using our debt consolidation calculator:
Total debt to consolidate: The combined balances of the debts you want to pay off — credit cards, personal loans, medical bills, or other high-interest accounts.
Home equity: The difference between your home's current market value and what you still owe on your mortgage. This is the equity you can potentially borrow against.
Home Equity Loan: A second mortgage that lets you borrow a lump sum against your home's equity at a fixed interest rate and repay it over a set term. Your primary mortgage stays in place.
Cash-Out Refinance: Replaces your existing mortgage with a new, larger one. You receive the difference in cash, which can be used to pay off debt. This resets your mortgage term and rate.
Interest rate: The cost of borrowing money, expressed as a percentage of the loan balance. Home equity products typically carry significantly lower rates than credit cards or personal loans.
Annual percentage rate (APR): The total cost of borrowing including the interest rate and applicable fees, expressed as a yearly rate. Compare APRs when evaluating options.
Loan term: How long you have to repay the loan. Longer terms reduce monthly payments but increase total interest paid over the life of the loan.
Closing costs: Fees required to complete a home equity loan or cash-out refinance. These typically range from 2% – 5% of the loan amount and should be factored into your total cost comparison.
Debt-to-income ratio (DTI): Your total monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use DTI to evaluate your ability to repay a loan.
Break-even point: The point at which your cumulative monthly savings from consolidation equal the upfront costs (e.g., closing costs). Knowing your break-even point helps you decide if consolidating makes financial sense.
Frequently asked questions
How do I know if debt consolidation could save me money?
Start by adding up your current minimum monthly payments on all the debts you want to consolidate. Then use the calculator to estimate what a Home Equity Loan or Cash-Out Refinance payment would look like at a lower rate. If the new payment is lower and your break-even point on closing costs is reasonable, consolidation may make financial sense but it's worth talking to a Home Loan Expert to see your real numbers.
How accurate is Rocket's debt consolidation calculator?
Our calculator provides estimates based on the numbers you enter but results are not guaranteed. Your actual rate, payment, and savings will depend on your credit profile, home equity, current debt balances, loan type, and closing costs. The best way to get accurate numbers is to start an application or speak with a Home Loan Expert.
What factors affect my debt consolidation rate?
Several factors influence the rate you'll receive on a Home Equity Loan or Cash-Out Refinance, including your credit score, loan-to-value ratio (LTV), debt-to-income ratio, loan amount, and current market conditions. A stronger credit profile and more available equity typically result in better rates.
What costs should I factor into a debt consolidation decision?
Beyond your new monthly payment, you should consider closing costs (typically 2%–5% of the loan amount), any prepayment penalties on existing debts, and the total interest you'll pay over the life of the new loan. A lower monthly payment doesn't always mean you'll pay less overall — especially if you extend your repayment term significantly.
Should I use a Home Equity Loan or a Cash-Out Refinance to consolidate debt?
Both options let you use your home equity to pay off high-interest debt, but they work differently:
- Home Equity Loan: Keeps your existing mortgage intact. Good if you have a low rate you don't want to change. Provides a lump sum at a fixed rate.
- Cash-Out Refinance: Replaces your current mortgage with a new one. May make sense if current rates are competitive with your existing rate, or if you want to simplify into one payment.
Our Home Loan Experts can help you compare both options based on your specific equity, rate, and payoff goals.
What is a break-even point, and why does it matter?
Your break-even point is how long it takes for your monthly savings to offset the upfront costs of consolidating — primarily closing costs. For example, if closing costs are $4,000 and you save $200/month, your break-even is 20 months. If you plan to stay in your home and keep the loan beyond that point, consolidation may make financial sense.