Home Equity Calculator
Find how much of your home you actually own, and how much still belongs to the bank.
Details
What it would sell for now
What you still owe, from your statement
Home equity
$200,000
Loan-to-value
60%
Equity share
40%
This works out how much equity you have in your home: its current value minus everything you owe against it.
It also shows how much of that equity a lender would actually let you borrow, which is always less than the full amount.
What home equity is
Home equity is the share of your home you genuinely own. It is the current value minus everything secured against it, including your mortgage and any second loan or credit line.
It grows two ways: by paying down the mortgage, and by the property rising in value. The second is outside your control and can reverse, which is worth remembering when equity is treated as a savings account.
The figure people miss is that your equity is not your borrowing limit. Lenders cap total borrowing at around 80-85% of the home's value, so a substantial slice always stays out of reach.
The 85% cap applies to the whole property, not to your equity. $400,000 × 0.85 is $340,000 of allowable total debt, and $250,000 of it is already used.
What to enter
- Home value today
- What it would sell for now, not what you paid. An online estimate is a starting point; a lender will use an appraisal.
- Mortgage balance
- What you currently owe, from your latest statement. Not the original loan amount.
- Second mortgage / HELOC
- Any other borrowing secured on the property. It reduces your equity just as the first mortgage does.
What this assumes
Value is an estimate until an appraisal is done, and lenders use theirs rather than yours.
Equity is not cash. Reaching it means borrowing against it or selling, and both have costs.
How to calculate your home equity
One subtraction gives your equity. A second calculation gives what you could actually borrow.
- LTV cap
- Usually 0.80 to 0.85, set by the lender
- owed
- Everything secured on the property
Find the current value. Recent comparable sales are the best guide. Automated estimates can be some way out in either direction.
Add up everything secured on it. First mortgage plus any second mortgage or HELOC balance.
Subtract for your equity. Value minus total owed. This is what you would keep on a sale, before selling costs.
Apply the lender's cap for borrowing. Multiply value by 0.85, then subtract what you owe. That is the realistic borrowing figure.
See a worked example: why $150,000 of equity is not $150,000 to borrow
- Home value
- $400,000
- Mortgage balance
- $250,000
Equity: $400,000 − $250,000 = $150,000.
Lender cap at 85%: $400,000 × 0.85 = $340,000 of total allowable debt.
You already owe $250,000, so $340,000 − $250,000 = $90,000 available.
At a stricter 80% cap it drops to $70,000. Lenders keep a cushion so the property still covers the loan if values fall.
$150,000 equity, about $90,000 borrowable
Frequently asked questions
Three main routes: a home equity loan (lump sum, fixed rate), a [HELOC](/real-estate/heloc-calculator) (credit line, usually variable), or a cash-out refinance that replaces your whole mortgage with a larger one.
Selling is the fourth, and the only one that turns equity into cash without taking on new debt.
Lenders cap total borrowing at roughly 80-85% of the home's value so there is a cushion if prices fall.
On a $400,000 home with $250,000 owed, that leaves about $90,000 rather than the full $150,000 of equity.
Slowly at first. Early mortgage payments are mostly interest, so very little goes to the balance in the first years.
On a 30-year loan, roughly a third of the principal is repaid by year 20 and the rest arrives in the final decade. Appreciation often does more of the work early on, though it is not guaranteed.
Owing more than the property is worth, often called being underwater. It happens when values fall or when very little was put down.
It does not affect you day to day if you keep paying, but it blocks selling or refinancing without bringing cash to the table.
Yes. It is the value of the property minus what you owe, which is exactly how net worth treats any asset with debt against it.
Worth noting separately though, since it is illiquid. Someone with strong net worth held entirely in home equity can still struggle with an unexpected bill.
Problems people actually run into
Treating equity as available money
Equity is a paper figure until you borrow against it or sell, and both routes cost. Borrowing means interest and closing costs; selling means agent fees and moving.
It also moves with the market. Equity built by rising prices can disappear again, which is why it is a poor substitute for actual savings.
Using an optimistic value
Online estimates can be well out, and owners tend to lean high. Lenders use their own appraisal, and a lower valuation directly reduces what you can borrow.
Check recent comparable sales in your area rather than a single automated figure, and expect the appraisal to be the number that counts.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026