Home Equity Calculator

How It Works

Home equity is a simple subtraction: what your home is worth minus what you still owe on it. If your home is worth $450,000 and your mortgage balance is $280,000, your equity is $170,000 — the part of the home that is genuinely yours. Equity grows in two ways: you pay down the mortgage month by month, and the home's value rises (or falls) with the market. It is the largest store of wealth most homeowners have, and it is also the number that decides whether you can drop PMI, refinance, or borrow against the home.

Lenders look at equity through the loan-to-value ratio, or LTV: the balance owed divided by the home's value, as a percentage. A $280,000 balance on a $450,000 home is an LTV of 62.22%. When you borrow against equity — with a home equity loan or a home equity line of credit (HELOC) — the lender sets a maximum total LTV, typically 80% to 85%, and the most you can borrow is the gap between that cap and what you already owe. This calculator works out both numbers: your equity and LTV today, and the maximum you could borrow at the cap you enter.

Worked Example

Take a home worth $450,000 with a mortgage balance of $280,000. The equity is $170,000.00, which is 37.78% of the home's value, and the LTV is 62.22%. At an 80% lender cap, the maximum total borrowing against the home is 80% of $450,000, or $360,000.00. Subtract the $280,000 already owed and the maximum additional borrowing is $80,000.00. After borrowing that full amount, the remaining equity would be $90,000.00 — the 20% cushion the lender insists on keeping in place.

Assumptions

• The home value you enter is an estimate. A lender will order an appraisal, and the appraised value — not your estimate — decides what you can borrow.
• The mortgage balance includes all loans secured by the home. If you have a second mortgage or an existing HELOC balance, add it to the balance field.
• The LTV cap is the maximum total loan-to-value the lender allows, combining the existing mortgage and the new borrowing. 80% to 85% is typical; some lenders go higher and some lower.
• The maximum borrowing shown is a ceiling, not an approval. Lenders also check your credit score, income, debt-to-income ratio and payment history.

What this calculator leaves out: closing costs and fees on a home equity loan or HELOC, the interest rate and payment on the new borrowing (HELOC rates are usually variable), tax treatment, and the risk that home values fall. It also does not account for any liens other than mortgages.

The LTV cap makes a big difference to how much you can borrow. The table below shows the same home — $450,000 value, $280,000 balance — at five caps:

Each 5 points of cap is worth $22,500 of borrowing power on this home. But a higher cap also means less equity left as a cushion: at a 90% cap you would have only 10% of the home's value left unborrowed, and a modest fall in prices could leave you owing more than the home is worth.

How to Use This Calculator

Enter your best estimate of the home's current value — recent sales of similar homes nearby are a better guide than a guess — and the total balance you owe on all mortgages. Set the LTV cap to the figure your lender uses, or leave it at 80% for a typical estimate. The results show your equity in dollars and as a percentage, your current LTV, and the maximum you could borrow at that cap.

Then test the value. Run the numbers with a value 10% lower than your estimate: if the equity nearly vanishes, your borrowing plans depend on the appraisal coming in high, and that is a risk worth knowing about before you apply. If the balance is higher than the value, the calculator tells you the home is underwater — you owe more than it is worth — which rules out borrowing against it until values recover or the balance falls.

Tips and Practical Advice

Borrow against equity for things that hold or build value. Home improvements that genuinely raise the home's worth, consolidating high-interest debt at a much lower rate, or education costs are the usual sensible reasons. Borrowing for holidays, cars or everyday spending turns your home into an ATM and leaves you with the debt long after the money is gone.

Understand the difference between the two ways to borrow. A home equity loan gives you a lump sum at a fixed rate with fixed payments — predictable, good for a single known cost. A HELOC works like a credit card secured by your home: you draw what you need during the draw period, usually at a variable rate, and pay it back over time. The flexibility is useful for phased projects, but the variable rate means the payment can rise.

Finally, remember that equity is not cash until you sell or borrow, and borrowing against it is secured debt. If you cannot repay a home equity loan or HELOC, the lender can foreclose. Keep the total borrowing well inside the cap, keep an emergency fund separate, and never borrow the maximum just because the lender offers it.

Sources: LTV caps and HELOC terms vary by lender; 80–85% is a typical maximum combined loan-to-value, not a rule. Home values are estimates until appraised. Last reviewed: 13 November 2026.

Frequently Asked Questions