Home Equity Calculator
Calculate your current home equity and see how much you can borrow.
Project future equity growth based on appreciation and mortgage paydown.
Property Information
Principal + Interest (P&I) only
National average: 3-4% per year
Your Current Home Equity
Total Equity Amount
$100,000
Equity Percentage
28.6%
Home Value
$350,000
Mortgage Balance
$250,000
Equity vs. Debt Breakdown
Loan-to-Value (LTV) Ratio
≤80% LTV - Excellent
Best rates, avoid PMI
80-90% LTV - Good
Acceptable, may require PMI
>90% LTV - High
Limited options, higher costs
Available Borrowing Power
Standard (80% LTV)
Most lenders
$30,000
Can borrow up to $280,000 total
Maximum (90% LTV)
Limited lenders
$65,000
Can borrow up to $315,000 total
Note: Usable equity = (Home Value × LTV%) - Current Mortgage. Most lenders require at least 15-20% equity to remain after borrowing.
Monthly Equity Growth
Your equity increases by $14,000 per year
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Frequently Asked Questions
How much home equity do I need to borrow against it?
Most lenders require at least 15-20% equity to remain after borrowing. For an 80% LTV limit, you need at least 20% current equity. For a 90% LTV, you need at least 10% equity. However, keeping more equity (30%+) provides a cushion against market fluctuations and gives you better rates.
What's the difference between usable equity and total equity?
Total equity is the full amount you own (Home Value - Mortgage Balance). Usable equity is what you can actually borrow. Lenders typically limit borrowing to 80-90% of home value (CLTV - Combined Loan-to-Value), minus your current mortgage balance. Example: $400K home, $200K mortgage = $200K total equity, but only $120K usable at 80% LTV ($400K × 0.80 = $320K max borrowing - $200K current = $120K available).
Is home equity the same as home value?
No. Home value is what your property is worth on the market. Home equity is the portion you own—the difference between market value and what you owe. If your home is worth $400,000 and you owe $250,000, your home value is $400,000 but your equity is only $150,000 (37.5% ownership).
How long does it take to build home equity?
Equity builds from day one with your down payment, then grows through monthly principal payments and appreciation. In the first 5-7 years of a mortgage, equity builds slowly because most payments go to interest. After year 10-15, it accelerates as more goes to principal. Appreciation can significantly accelerate equity growth—4% annual appreciation on a $400,000 home adds $16,000 in equity per year, regardless of your mortgage payments.
Can I lose home equity?
Yes. Home equity can decrease if: (1) Home values decline due to market conditions, (2) You take out a home equity loan or HELOC and increase your debt, (3) You fall behind on payments and incur fees/penalties, or (4) Your neighborhood deteriorates. During the 2008 financial crisis, many homeowners lost substantial equity or went "underwater" (owing more than home value). Maintaining your property and avoiding over-leveraging helps protect equity.
What is a good amount of home equity to have?
Financial experts generally recommend maintaining at least 20% equity to avoid PMI and have refinancing flexibility. 30-40% equity provides a strong cushion against market downturns. 50%+ equity gives you substantial borrowing power and financial security. However, "good" depends on your goals—investors might maintain lower equity to maximize leverage, while those nearing retirement might prioritize paying off the mortgage completely.
How does home equity affect my net worth?
Home equity directly increases your net worth dollar-for-dollar. If you have $200,000 in equity, that's $200,000 of your net worth. However, home equity is "illiquid"—you can't easily convert it to cash without selling or borrowing. It's important to have a balanced portfolio with liquid assets (savings, investments) and illiquid assets (home equity) for financial stability.
Should I use home equity to pay off credit card debt?
It depends. The math often makes sense—credit cards charge 15-25% APR while home equity loans/HELOCs charge 6-10%. However, you're converting unsecured debt to secured debt, putting your home at risk if you can't pay. Only consider this if: (1) You have stable income, (2) You'll commit to not running up new credit card debt, (3) You have a solid repayment plan, and (4) The interest savings are substantial. Address the root cause of debt first, or you'll end up with both credit card debt AND a home equity loan.
What happens to my home equity when I sell?
When you sell, you pay off the mortgage balance and receive the remaining equity (minus selling costs like agent commissions, title fees, etc.). Typical selling costs are 6-10% of sale price. Example: Sell for $400,000, owe $200,000, pay $30,000 in costs = $170,000 net proceeds. You may owe capital gains tax on profit above $250,000 ($500,000 married) if it's your primary residence for 2+ of the last 5 years. Investment properties face full capital gains tax.
How accurate are home equity calculators?
Home equity calculators provide estimates based on the information you input. The accuracy depends on: (1) How accurate your home value estimate is—use recent appraisals or professional estimates rather than online algorithms like Zillow which can be off 5-10%, (2) Your exact mortgage balance—check your latest statement, (3) Your actual payment breakdown and interest rate, and (4) Realistic appreciation estimates for your specific market. For important financial decisions, get a professional appraisal ($300-500) and consult with multiple lenders for actual borrowing capacity.