Home Equity Calculator
Enter Property Details
About Home Equity Calculator
What Is Home Equity?
Home equity is the difference between your home's current market value and the amount you still owe on your mortgage. It represents the portion of your home that you truly own. If your home is worth $450,000 and you owe $280,000 on your mortgage, you have $170,000 in equity (about 38%). Equity builds over time through two mechanisms: principal paydown (each mortgage payment reduces what you owe) and appreciation (your home increases in value). Home equity is often the largest component of a family's net worth and can be accessed through home equity loans, HELOCs, or cash-out refinancing.
How Equity Is Calculated
The formula is Equity = Current Market Value - Remaining Mortgage Balance. Equity percentage (LTV inverse) is: Equity % = (Equity / Market Value) x 100. Lenders use Loan-to-Value ratio (LTV = Mortgage / Value) to determine borrowing capacity. Most home equity loans require at least 15-20% equity (80-85% maximum LTV).
How to Use This Calculator
Enter your home's estimated current market value and your remaining mortgage balance. The calculator shows your total equity in dollars, equity percentage, LTV ratio, and how much you could potentially borrow through a home equity loan (based on 80% combined LTV). It also projects equity growth over the next several years assuming continued mortgage payments and modest appreciation.
Frequently Asked Questions
How much equity do I need for a home equity loan?
Most lenders require at least 15-20% equity. They typically lend up to 80-85% of your home's value minus your existing mortgage. Some lenders go up to 90% LTV for well-qualified borrowers.
Does equity increase automatically?
Yes, through two mechanisms: principal paydown with each mortgage payment and home value appreciation. Early mortgage payments are mostly interest, so equity builds slowly at first then accelerates over time.
Can I lose equity?
Yes. If property values decline (as in 2008), you can lose equity or even go underwater (owe more than the home is worth). Taking on additional debt against your home also reduces equity.
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