Home Equity Calculator
Find your home equity, LTV ratio, and how much you can borrow via a HELOC or home equity loan. Formula and benchmarks explained.
Borrowing Capacity
Home Equity
$0
📐 Home Equity Formula
Equity = Home Value − (Mortgage Balance + Second Mortgage)
LTV = (Mortgage Balance / Home Value) × 100
Max Borrowing = (Home Value × Max CLTV%) − Existing Mortgage(s)
Appreciation Gain = Current Value − Original Purchase Price
What Is Home Equity and Why Does It Matter?
Home equity is the portion of your home's value that you own outright — the difference between what your home is worth and what you still owe on your mortgage. It's one of the most powerful wealth-building tools available to homeowners, growing both as you pay down your loan and as property values appreciate.
How to Use Home Equity
There are three main ways to access home equity: a Home Equity Loan (a lump-sum loan at a fixed rate), a HELOC (Home Equity Line of Credit, a revolving credit line at a variable rate), or a cash-out refinance (replacing your existing mortgage with a larger one). HELOCs are flexible and popular for renovation projects; home equity loans suit one-time large expenses.
LTV Ratios and What They Mean for You
Your Loan-to-Value ratio determines your borrowing options. Below 80% LTV means no PMI and access to the best rates. 80–85% LTV — most lenders require PMI if it's your primary mortgage; HELOC borrowing may be limited. 85–90% — fewer lenders, higher rates. Above 90% — very limited options, significantly higher rates. The calculator above shows your current LTV and flags which bracket you're in.
Frequently Asked Questions
Home equity = Current Market Value − All Mortgage Balances. If your home is worth $450,000 and you owe $280,000, your equity is $170,000 (37.8%). The calculator above does this instantly and also shows your borrowing capacity.
Most lenders cap combined borrowing at 80–85% of your home's value (CLTV). At 80% CLTV on a $450,000 home: max combined = $360,000. Minus your $280,000 mortgage = $80,000 available via HELOC. Change the Max CLTV field above to see how different lender limits affect your borrowing capacity.
LTV (Loan-to-Value) measures a single loan against your home value. CLTV (Combined LTV) measures all loans combined — your first mortgage plus any HELOC or second mortgage. Lenders use CLTV when evaluating new home equity borrowing to understand total exposure.
Yes. Extra principal payments directly reduce your mortgage balance, increasing equity dollar-for-dollar. On a $300,000 30-year loan at 7%, paying an extra $200/month saves approximately $84,000 in interest and builds equity 6 years faster. Use the Mortgage Calculator for amortization projections.