Home Equity Calculator

What Is Home Equity?

Equity is the slice of the property's value that is yours rather than the lender's, and it grows two ways: by paying the mortgage down, and by the value itself rising. It is what a sale would leave you once the mortgage is cleared at closing, before selling costs, and the number a lender starts from when deciding how much more it is willing to advance.

Equity, in One Subtraction

The Consumer Financial Protection Bureau defines it in a single line: equity is "the amount your property is currently worth, minus the amount of any existing mortgage on your property." Nothing else enters the subtraction — not what you paid for the house, not what you have spent on it, not what you owe on anything unsecured. A $400,000 house carrying a $220,000 mortgage holds $180,000 of equity whether the owner bought it for $180,000 or for $395,000.

Two consequences follow immediately. Equity moves when either term moves, so a market that gains 10 percent can hand an owner more ground than several years of principal payments. And equity is unrealized until you either sell or borrow — it is a position, not a balance you can draw on at a cash machine.

The Two Engines: Principal and Price

Principal repayment is the reliable engine. Every scheduled payment retires a slice of the balance, and because a fixed-rate mortgage is front-loaded with interest, that slice starts small and grows every month for the life of the loan. It is slow, and it is entirely under your control.

Appreciation is the fast engine and the untrustworthy one. On a $400,000 home with $220,000 owed, the panel returns "$100,000 available" at an 80 percent cap. Push the value to $440,000 with the balance unchanged and it returns "$132,000 available"; pull it down to $360,000 and the same house returns "$68,000 available". The mortgage did not move in either direction. The number a lender will write did.

Wondering where the balance will sit after another five years of payments? That is an amortization question, answered by the Mortgage Calculator.

Why Lenders Will Not Lend Against All of It

A lender's protection against a falling market is the slice of value it refuses to lend against. Cap combined debt at 80 percent of the appraisal and prices can drop by a fifth before the loan is bare; lend to 95 percent and a modest correction wipes out the margin. That cushion, not your equity, is what sets the borrowable figure.

The tiers on this page are not arbitrary. The federal Interagency Guidelines for Real Estate Lending Policies set no loan-to-value limit at all for permanent mortgages and home equity loans on owner-occupied one- to four-family homes — but they add that for any such loan at 90 percent LTV or above at origination, "an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral." Ninety percent is the level at which the product changes character, which is why the 90 percent option here is labeled less common and why 80 percent is the default nearly everywhere.

How Do You Calculate Home Equity?

Two subtractions and one multiplication, in that order. The first subtraction gives the equity you own; the multiplication sets the ceiling on total debt against the property; the second subtraction turns that ceiling into a sum you could actually receive.

The Home Equity Formula, Written Out

Total equity          = home value − mortgage balance
Combined debt ceiling = home value × LTV cap
Available to borrow   = (home value × LTV cap) − mortgage balance
Current LTV           = (mortgage balance ÷ home value) × 100

Available to borrow is floored at zero: when the ceiling sits below what you already owe, the calculator returns $0 rather than a negative sum. Total equity needs no floor here — a balance that meets or exceeds the value stops the calculation before this arithmetic runs.

Read the third line the other way and it becomes a useful shortcut. At an 80 percent cap, available to borrow equals (80 − your current LTV) percent of the home's value, so every single percentage point of LTV below the cap is worth one percent of the house.

Step by Step

• Establish the value. Use recent sale prices of genuinely comparable homes nearby, not an asking price and not the figure you would like to see.
• Subtract the mortgage balance from that value. The result is your total equity — what the sale would leave you before costs.
• Multiply the value by the lender's cap: 0.80, 0.85 or 0.90. That product is the most total debt the lender will allow against the property.
• Subtract the mortgage balance from the ceiling. What remains is the borrowable figure. If it comes out negative, the answer is zero.
• Divide the balance by the value and multiply by 100 for your current loan-to-value ratio — the number the lender will quote back at you.

Multiplying by the cap and then subtracting the balance is where mental arithmetic usually goes wrong. The cap applies to the home's value, not to your equity: 80 percent of $180,000 of equity would be $144,000, and that answer is off by $44,000.

Worked Example: A $400,000 Home With $220,000 Owed

Enter 400000 as the market value, leave the pre-filled balance at 220000, keep the 80% cap selected, and press Calculate. Every figure below comes from that run.

The panel leads with "$100,000 available". Below it sits the arithmetic, "Home $400,000 × 80% lender cap − $220,000 owed", then a labeled row reading Total equity — "$180,000 (you currently sit at 55.0% LTV)", and finally "Available via home-equity loan (lump sum, fixed) or HELOC (credit line, variable) — your home secures either".

So the two headline numbers differ by $80,000. That gap is the reason this page separates them: $180,000 is what the house owes you, $100,000 is what a lender at an 80 percent cap will hand over while you keep living in it.

Home Equity Chart: A $400,000 Home

One house, held constant at $400,000, read at every stage of its mortgage. Each row below was produced by running this calculator rather than worked out by hand.

By Mortgage Balance, at an 80% Cap

The top three rows explain the disappointment that often follows a recent purchase. Equity of $40,000 or $80,000 is real money and none of it is reachable, because the cap is measured against the house rather than against the owner's share of it. Borrowing capacity does not begin at zero equity — it begins at 20 percent equity, and everything below that line is invisible to an 80 percent lender.

Now look at the bottom row. Even with the mortgage gone, an 80 percent cap leaves $80,000 of a debt-free house untouchable. Eighty percent of your equity is the ceiling of the whole system, and only a borrower who owes nothing reaches it.

The Same House at 80%, 85% and 90%

Value $400,000, balance $220,000, total equity $180,000 in every row. Only the cap changes.

Five percentage points of cap are worth $20,000 on this house — 5 percent of $400,000 — and the same five points are worth $26,250 on a $525,000 home. Because the cap multiplies the property's value, the payoff from shopping for a higher-cap lender scales with the house rather than with your equity.

Higher caps are not free. A lender that goes to 90 percent holds half the cushion of one that stops at 80, and it prices that difference into the rate, the fees, or both. The guidelines quoted above expect mortgage insurance or readily marketable collateral at that level, and somebody pays for it.

What One Point of LTV Is Worth

Since available borrowing equals (cap − current LTV) percent of the home's value, one percentage point of LTV is worth exactly one percent of the house. On a $400,000 home that is $4,000 a point; on a $300,000 home, $3,000; on a $525,000 home, $5,250. Sitting at 55.0 percent against an 80 percent cap means 25 points of headroom, and 25 × $4,000 is the $100,000 the panel prints.

One caution about doing that sum yourself. The displayed LTV is rounded to one decimal place while the borrowable figure is computed from the unrounded ratio. A $525,000 home with $310,000 owed shows 59.0% LTV and "$110,000 available"; recomputing from the printed 59.0 gives $110,250, because the true ratio is 59.0476 percent. Trust the dollar figure — it comes from the raw numbers.

Using This Free Home Equity Calculator Online

Three fields, no account and no email, and the arithmetic itself runs in your browser rather than on a server — though, like most of the web, this page also loads analytics and advertising scripts.

The Three Fields

• Home's Market Value ($) — a number field, empty when the page opens, with 400000 shown as a placeholder. This is the appraised or estimated value today, not the purchase price.
• Mortgage Balance ($) — a text field that arrives pre-filled with 220000. Use the payoff balance from your latest statement, and type 0 if the mortgage is gone.
• Lender LTV Cap — three buttons, with 80% selected by default and 85% and 90% alongside it. If a lender has quoted you a combined-LTV limit, use theirs; otherwise 80% is the safe assumption.

There is no rate field, no term field and no fee field, because none of them change the answer to this particular question. The cap decides how much; the loan you eventually sign decides what it costs.

When It Calculates

Nothing is computed until you press Calculate. The page would run automatically on load if every field already carried a value, and one does not — Market Value opens empty — so the result panel waits. It also does not recalculate while you type: change the value, change the cap, then press Calculate again.

Reset returns the panel to its waiting state and puts the form back the way it arrived: an empty value box, a balance of 220000, and the 80% cap selected.

Blank, Zero and Negative Are Three Different Things

An empty box, a zero and a negative number are handled at three different stages, and the wording of the amber notice tells you which stage caught you.

• A blank field is caught before the formula runs. Press Calculate with Market Value empty and an amber notice names it: "Enter a value for Home's Market Value." Empty both boxes and it names both: "Enter a value for: Home's Market Value, Mortgage Balance." The wording lists whichever fields are actually empty.
• Zero or a negative market value does reach the formula, which refuses it with "Enter your home's current market value". Neither field declares a minimum or a maximum, and the form is rendered without browser validation, so these guards are the only floor there is.
• Zero in the balance box is a legitimate answer rather than an error — it is how you tell the tool the house is paid off.
• A balance that meets or exceeds the value stops everything: "The mortgage balance meets or exceeds the home value — no equity to borrow against".

How to Read Your Result

A successful calculation always prints four lines. Taken in order they give you the answer, the arithmetic behind it, your position today, and the shape the money can take.

Line by Line

The third line is the one worth pausing on. It carries two facts — the equity you own and the LTV you occupy — and it is the second that a loan officer reacts to. Anything under 80 percent leaves room at a standard lender; the closer you sit to it, the thinner the menu becomes.

When the Headline Says $0

Zero is an answer rather than a failure, and the panel treats it as one: it appears in the normal result box with the same four lines. The fourth reads "Your LTV is already above the cap — paying down principal or appreciation unlocks borrowing", and it shows whenever the borrowable figure reaches zero — including when you are sitting exactly on the cap rather than past it.

That boundary is precise to the dollar. On a $400,000 home at an 80 percent cap, a balance of $319,999 returns "$1 available"; $320,000 and $320,001 both return "$0 available". There is no rounding-down grace and no minimum-loan logic in the calculation — the ceiling is a hard line, and the tool reports exactly where you stand against it.

The Share of Your Equity You Can Actually Reach

An 80 percent cap throughout. The final column is the borrowable figure as a percentage of total equity, and it is the number most people are surprised by.

The reachable share climbs as the balance falls, and it climbs fastest just after you clear the cap. A household at 75 percent LTV can reach a fifth of its equity; a household at 55 percent can reach more than half of a much bigger number. Both effects compound, which is why the last few years before a mortgage is retired change borrowing capacity far more than the first few did.

The share never exceeds the cap itself. Eighty percent is the ceiling, reached only when the mortgage balance is zero, and every dollar still owed pushes the reachable share below it.

What the Result Deliberately Leaves Out

This panel answers one question — how much room the cap leaves — and says nothing at all about price. No interest rate, no monthly payment, no term, no closing cost, no annual fee and no draw-period schedule appears in any line of it.

• Underwriting. Income, credit score, debt-to-income ratio, employment history and reserves all sit between this figure and an approval, and any one of them can shrink the offer or end it.
• Other liens. The tool subtracts one balance. A second mortgage, a drawn HELOC, a solar loan or a tax lien all count toward combined LTV at a real lender.
• Mortgage insurance. Where a high-LTV structure requires it, the cost is not modeled here.
• The appraisal. Your typed value is an assumption until a licensed appraiser signs a report, and lenders lend against theirs.

Home Equity Examples

Three households at different points in the same journey, each run at all three caps. Watch how little the cap matters once the balance is low, and how completely it decides the outcome when the balance is high.

Two Years In: $300,000 Home, $240,000 Owed

At an 80 percent cap the panel returns "$0 available" alongside "Total equity: $60,000 (you currently sit at 80.0% LTV)". Sixty thousand dollars of ownership, none of it borrowable, because the ceiling of $240,000 is precisely what is already owed.

Switch to 85 percent and $15,000 appears. Switch to 90 percent and it becomes $30,000 — exactly half the equity. For a household sitting on the cap, the choice of lender is not a marginal improvement but the whole difference between nothing and something. It is also the level at which the guidelines expect credit enhancement, so the route that looks cheapest rarely is.

Halfway: $525,000 Home, $310,000 Owed

Here equity borrowing stops being theoretical. The 80 percent panel prints "$110,000 available" and "Total equity: $215,000 (you currently sit at 59.0% LTV)". At 85 percent it becomes $136,250, and at 90 percent, $162,500.

The step from 80 to 85 adds $26,250 for this household against $15,000 for the one above, on the same five points of cap, because the cap multiplies a larger house. Note too that the reachable share at 80 percent is 51.2 percent of equity — roughly half, which is a fair rule of thumb for anyone whose LTV sits in the high fifties.

Nearly Done: $400,000 Home, $120,000 Owed

At 80 percent the answer is "$200,000 available" against "Total equity: $280,000 (you currently sit at 30.0% LTV)", which puts 71.4 percent of the equity within reach. Moving to a 90 percent cap adds $40,000, taking it to $240,000.

Once the mortgage is gone entirely, the same house returns $320,000 at an 80 percent cap and $360,000 at 90 percent. The gap between those two caps is $40,000 — ten percent of the value — but only while the 80 percent cap still leaves headroom, which on this house means a balance at or below $320,000. Past that the 80 percent line reads $0 and the gap shrinks with it: $30,000 owing $330,000, $8,000 owing $352,000, nothing at all by $360,000. What changes below that line is how much the gap matters next to what you already had.

Paying Down Versus Prices Rising

Start pinned at the cap: a $400,000 home with $320,000 owed at 80 percent, which returns "$0 available". There are two ways out of that position, and they trade at different rates.

• Pay $20,000 off the principal. The balance falls to $300,000 and the panel returns "$20,000 available" — one dollar of capacity for every dollar repaid.
• The market lifts the house to $450,000 with the balance untouched. The panel returns "$40,000 available" and a 71.1% LTV — eighty cents of capacity per dollar of appreciation, because the cap only reaches 80 percent of the gain.

The exchange rate is the point, not the winner: $50,000 of appreciation delivered more capacity than $20,000 of paydown mainly because it was a far bigger move. Per dollar, principal is worth more — and it is the only one of the two you can put on a schedule.

Home Equity Loan vs HELOC

The fourth line of the result names both products because the cap governs them identically. What differs is how the money arrives, how the rate behaves, and what repayment looks like when the borrowing stops.

Two Shapes, One Cap

The CFPB describes a home equity loan as money received "in a lump sum payment" that "may have a fixed or adjustable interest rate", and a HELOC as an "open-end" line you can "borrow or draw money multiple times" from, usually at an adjustable rate whose payment varies with the balance outstanding.

Choose on the shape of the need. A single known cost — a contracted renovation, a consolidation of balances you intend to close — suits the fixed lump sum. Staged spending over a couple of years, or a standby facility you may never touch, suits the line.

The End of the Draw Period

A HELOC's least-read clause governs what happens when the draw window closes. The CFPB warns that your lender "may set a schedule so that you repay the full balance, often over ten or 20 years" — and that "in some cases, you may have to pay back the whole amount you borrowed as soon as the repayment period begins."

That second possibility is a balloon, and it converts a comfortable interest-only draw into a demand for the entire balance. Before signing, find the sentence in the agreement that says which of the two applies. The borrowable figure on this page tells you nothing about it.

The Three-Day Right to Cancel

Because these are non-purchase mortgages on a home you already live in, federal law gives you a window to undo the deal: three business days. For rescission purposes business days include Saturdays, but not Sundays or legal public holidays.

The clock starts on the first business day after the last of three events — you sign the credit contract, you receive the Truth in Lending disclosure, and you receive two copies of the notice explaining your right to rescind. Where the last of those lands on a Friday with no holiday intervening, the CFPB's own example gives you until midnight the following Tuesday.

A third door leads to the same equity: replacing the first mortgage entirely with a larger one and taking the difference in cash. That trade-off belongs to the Refinance Calculator.

When the Interest Is Deductible

What the money is spent on, not the product name, decides the tax treatment. IRS Publication 936 states that "interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer's home that secures the loan", and adds that no matter when the debt was incurred, interest is not deductible to the extent the proceeds were not used that way.

A ceiling sits on top of that test: for debt secured after December 15, 2017, the limit is $750,000, or $375,000 for a married taxpayer filing separately, counting the first mortgage and the equity borrowing together. A kitchen rebuilt with the proceeds is potentially deductible; the same money spent clearing credit cards is not. Check your own position against the current edition of Publication 936, or with a tax preparer, before counting on it.

Limits: When This Calculator Does Not Apply

This is a cap calculator. It reports how much room a given loan-to-value limit leaves above your existing mortgage, and it is silent on everything else standing between that figure and money in an account.

The Cap Is a Lender Policy, Not a Legal Ceiling

No statute sets 80 percent. The Interagency Guidelines decline to fix a supervisory LTV limit for permanent mortgages and home equity loans on owner-occupied one- to four-family property at all, leaving each institution to set its own internal limit, with the credit-enhancement expectation arriving at 90 percent. Credit unions, portfolio lenders and specialist second-lien shops each draw the line in a different place, and some go past 90 percent at prices to match.

Treat the three options here as the common tiers rather than the whole market. Where a lender has quoted you a combined-LTV limit in writing, that is the number to select — and if it is not one of the three, work the formula in the section above using your own figure.

It Assumes One Mortgage and Nothing Else on the Title

Only a single balance is subtracted. Every other lien secured by the property — a second mortgage, the drawn balance of an existing HELOC, a solar-panel financing agreement, a contractor's mechanic's lien, an unpaid property-tax lien — counts toward combined LTV when a lender runs the same sum.

The workaround is to add them up and enter the total in the balance box. A $400,000 home with a $220,000 first mortgage and a $30,000 second is a $250,000 entry, not a $220,000 one, and the difference is $30,000 of capacity you would otherwise believe you had.

Your Value Is an Estimate Until Someone Inspects the House

Writing about the mortgage application process, the CFPB separates three kinds of valuation: a full appraisal by a licensed appraiser who inspects the property, which it calls the most common type; a broker price opinion from a real estate sales professional; and an automated valuation model, "a computer-generated value that uses mathematical models that compare information about the house you want to buy—number of bedrooms, bathrooms, square feet, etc.—with recent sales figures and other information about the housing market in your area." It notes that these "may be different because they are estimates and may be based on different comps or may have been completed at different times or for different purposes."

Since a lender lends against its own number, a gap between the estimate you type and the appraisal you receive costs eighty cents on the dollar at an 80 percent cap. That $400,000 home with $220,000 owed shows "$100,000 available"; if the appraisal lands at $360,000, the same panel shows "$68,000 available". Running this at a deliberately conservative value is the cheapest way to avoid that conversation.

What the Balance Field Will Quietly Swallow

The balance box accepts text and strips everything that is not a digit or a decimal point before reading it, which is helpful right up until it is not.

• Dollar signs, commas and spaces are removed harmlessly: "$220,000" and "220 000" both read as $220,000.
• Shorthand does not survive. "220k" loses the k and reads as $220 owed, which turns the $400,000 home into "$319,780 available" at an 80 percent cap.
• A minus sign is stripped rather than rejected, so "-50000" is read as $50,000 owed.
• Letters on their own read as nothing. Type "n/a" and the panel reports "$320,000 available" on a house it believes is debt-free.

Type whole dollars, digits only. Cents are accepted, but every figure is rounded to the nearest dollar for display, so on the $400,000 home a balance of $200,000.50 prints as "$200,001 owed" beside a total equity of "$200,000" — two lines that will not reconcile if you subtract them on paper.

Where the plan is to move card balances onto the house, price what those balances cost as they stand before comparing rates, using the Credit Card Payoff Calculator.

A Number Is Not an Offer

Clearing the cap test is necessary and nowhere near sufficient. Lenders also test income, credit history, debt-to-income ratio, the property's occupancy status and, for a HELOC, your capacity to service a payment that moves with rates. The figure printed here is the most the collateral allows, not the least your file will support.

And the collateral is the house. Both products are secured by it, and the CFPB's warning runs to one sentence: "If you cannot pay back the HEL, the lender could foreclose on your home." That is the difference between this debt and an unsecured balance, and it is why a smaller borrowable figure is not automatically the worse outcome.