Home Equity Calculator
Home Equity
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Equity Percentage
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LTV Ratio
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HELOC Borrowing Power (80% LTV)
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Understanding Home Equity
Home equity is the difference between your home's current market value and what you owe on it. Equity = Home Value - Mortgage Balance - Other Liens. As you pay down your mortgage and your home appreciates in value, your equity grows. Equity represents your ownership stake in the property.
The Loan-to-Value (LTV) ratio is your total debt divided by home value. Lenders use LTV to assess risk: below 80% LTV is generally considered good, and below 80% eliminates the need for private mortgage insurance (PMI). The equity percentage is simply 100% minus LTV.
You can access your home equity through a Home Equity Line of Credit (HELOC), home equity loan, or cash-out refinance. Most lenders require you to maintain at least 20% equity (80% combined LTV) after borrowing. HELOCs typically have variable rates and work like a credit line, while home equity loans have fixed rates and provide a lump sum.
Frequently Asked Questions
How do I find my homes current value?
Check recent comparable sales in your area, use online estimation tools like Zillow or Redfin, or hire a professional appraiser for the most accurate valuation. Your county tax assessment is another reference point.
What is a good amount of home equity?
Having at least 20% equity eliminates PMI and gives you borrowing flexibility. Most financial advisors suggest maintaining at least 20% equity even when borrowing against your home.
Can I borrow against my home equity?
Yes, through a HELOC, home equity loan, or cash-out refinance. Most lenders allow you to borrow up to 80% of your home value minus existing debt. Some allow up to 85-90% for well-qualified borrowers.
How fast does home equity build?
Equity builds through mortgage payments (principal reduction) and home appreciation. Early mortgage payments are mostly interest. Appreciation varies by market but historically averages 3-5% per year nationally.