Home Equity Calculator
Find your home equity and how much you could potentially borrow against it.
Your Details
Breakdown
Visual split of the key components
- Mortgage Balance260000
- Your Equity160000
Sensitivity
How the result changes across a range
How It Works
- Enter the values on the left.
- Press Calculate to see your results and charts.
- Use Reset to start over from the defaults.
Formula Used
Potentially Borrowable = (Home Value × Max LTV%) − Mortgage Balance.
Good to Know
- • Lenders typically cap combined loan-to-value (mortgage + home equity loan) around 80-85%.
- • Home equity can be tapped via a home equity loan, HELOC, or cash-out refinance.
Important Notes
- • Home value is often based on an appraisal, which can differ from your own estimate.
- • Not all of your equity is typically available to borrow.
How Equity Builds Over Time
Home equity grows two ways: paying down the mortgage balance directly, and the home's market value appreciating over time. Early in a mortgage, equity growth from paying down principal is slow (since payments are interest-heavy), so market appreciation often accounts for a larger share of equity growth in the first several years of ownership.
Ways to Access Home Equity
The main options are a home equity loan (a lump sum with fixed payments), a HELOC (a revolving line of credit you draw from as needed), or a cash-out refinance (replacing your existing mortgage with a larger one and taking the difference in cash). Each has different rate structures and repayment terms, and lenders generally won't let combined borrowing exceed a set percentage of home value — the "Max Combined LTV" figure above reflects that cap.
The Language of This Calculator
- Home equity — the portion of a home's value the owner actually owns: value minus mortgage balance.
- Combined loan-to-value (CLTV) — total borrowing (mortgage plus any home equity loan) as a percentage of home value.
A Sample Calculation: How Much Could Be Borrowed
On a $420,000 home with a $260,000 mortgage balance, at an 85% max combined LTV:
Max total borrowing = $420,000 × 85% = $357,000
Potentially borrowable = $357,000 − $260,000 = $97,000
Even though total equity is $160,000, the lender's 85% CLTV cap means only about $97,000 of it is realistically borrowable — lenders intentionally leave a cushion of equity untapped to protect against value declines.
CLTV Cap Comparison Table
On a $420,000 home with $260,000 owed:
| Max CLTV | Borrowable |
|---|---|
| 75% | $55,000 |
| 85% | $97,000 |
| 90% | $118,000 |
Errors People Often Make About Home Equity
- Overestimating home value — an appraisal may come in lower than expected.
- Borrowing the full available amount — leaves no equity cushion against a market downturn.