Home Equity Calculator
Calculate your current home equity, equity percentage, and how much you could borrow through a HELOC or home equity loan based on 80% LTV limits.
Results
Visualization
How It Works
Home equity is the difference between your property's current market value and what you owe on it. It represents your ownership stake in the property. Lenders allow you to borrow against equity through HELOCs or home equity loans, typically up to 80% of the property's value minus existing debt. Equity grows as you pay down your mortgage and as the property appreciates.
The Formula
Variables
- Current Value — Today's estimated market value of the property based on comps or appraisal
- Outstanding Mortgage — Remaining principal balance on your primary mortgage
- Other Liens — Any additional debt secured by the property — second mortgages, tax liens, judgments
- Equity — Your ownership stake — the value above what you owe
- HELOC Available — Maximum you can borrow through a home equity line of credit at 80% LTV
Worked Example
Your property is worth $400,000 and you owe $250,000 on the mortgage with no other liens. Equity = $400,000 - $250,000 = $150,000. Equity percentage = 37.5%. At 80% LTV, you can borrow up to ($400,000 x 0.80) - $250,000 = $70,000 through a HELOC.
Practical Tips
- Get a professional appraisal or use recent comparable sales for an accurate property value — do not overestimate.
- Equity above 20% eliminates PMI on conventional loans, saving hundreds per month.
- A HELOC on a rental property can fund your next down payment — but it adds risk and debt.
- Property values can decline — do not treat equity as guaranteed wealth until you sell or refinance.
- Interest on HELOCs used for home improvements is tax-deductible; interest for other purposes usually is not.
Frequently Asked Questions
How is home equity different from net worth?
Home equity is one component of net worth. Your total net worth includes all assets (home, savings, investments) minus all liabilities (mortgage, loans, credit cards). Home equity is just the property portion.
Can I access my home equity without selling?
Yes. A HELOC gives you a revolving credit line. A home equity loan gives you a lump sum. Cash-out refinancing replaces your mortgage with a larger one and gives you the difference. Each has different rates and terms.
What is the difference between HELOC and home equity loan?
A HELOC is a revolving line of credit (like a credit card) with variable rates. A home equity loan is a fixed lump sum with fixed payments. HELOCs offer flexibility; home equity loans offer predictability.
How much equity do I need for a HELOC?
Most lenders require at least 15-20% equity after the HELOC. If your home is worth $400,000, you need at least $60,000-$80,000 in equity before a lender will approve a HELOC.
Does home equity build faster with extra mortgage payments?
Yes. Every extra dollar paid toward principal directly increases equity. An extra $200/month on a $250,000 mortgage at 7.5% can build an additional $30,000+ in equity over 5 years.