Home Equity Calculator
Equity is what is left of the house after everything secured against it. Work out where you stand, what your combined loan-to-value is, and how much borrowing room a lender limit would leave.
On this page
Equity, and the two ratios that matter
Equity is simple arithmetic: what the house is worth, less everything secured against it. What lenders actually underwrite to is the ratio, and there are two of them.
Loan-to-value is the first mortgage over the value. It governs the first lien and it is what mortgage insurance is measured against.
Combined loan-to-value adds every other lien: a second mortgage, a drawn HELOC, a tax lien. This is the ratio a second-lien lender cares about, because they are behind the first mortgage in a foreclosure and only what is left over reaches them.
The calculator reports both, because a first-lien LTV of 56% can sit alongside a combined LTV of 70%, and only the second describes what you can actually borrow against.
How much a lender will lend
Home equity lending is usually capped at a maximum combined loan-to-value. Set that maximum against the value and subtract what is already owed, and the remainder is the theoretical borrowing capacity:
capacity = value × maximum CLTV − total existing debt
Theoretical, because it is a ceiling rather than an approval. Income, credit, debt-to-income, and the appraisal all sit between that figure and a loan, and any of them can reduce it. It tells you what is impossible rather than what is available.
The value is the weakest input
Every figure on this page moves with the home value, and the value is the one thing you do not control. An online estimate is a model output, not an appraisal, and it can be off by a substantial margin in either direction — especially for unusual properties or thin markets.
A lender will order its own valuation and use that. If a low appraisal is plausible, run the numbers again at ten percent less and see whether the plan survives it.
A worked example
A house worth $520,000 with a $298,000 first mortgage and a $15,000 HELOC balance, considering borrowing $60,000 more, against an 85% maximum combined loan-to-value.
Total debt is $313,000, so equity is $207,000 — about 40% of the value. First-lien LTV is 57.3% and combined LTV is 60.2%. The 85% ceiling is $442,000, leaving $129,000 of theoretical capacity, so the $60,000 fits with room to spare. After borrowing, combined LTV would be 71.7% and equity $147,000.
Run it again at a $470,000 appraisal and the ceiling drops to $399,500 — capacity falls to $86,500, and the request still fits but with much less margin.
Negative equity
When the debt exceeds the value, the equity figure goes negative and the calculator says so plainly. It is worth knowing rather than avoiding: it means selling would require bringing money to closing, and it closes off most refinancing options until either the balance falls or the value rises.
It is not an emergency by itself. A mortgage being paid on time is unaffected by the property's valuation, and equity rebuilds with every payment.
What this does not cover
- Whether you qualify. Capacity is a ceiling. Income, credit score, and debt-to-income all sit between it and an approval — see the DTI calculator.
- The cost of borrowing. A home equity loan or HELOC has its own rate, fees, and closing costs.
- How HELOCs are counted. Some lenders count the full credit line rather than the drawn balance, which reduces capacity.
- Selling costs. Equity is not what you would walk away with — agent commission and transfer costs come off first.
- Tax treatment. Interest on home equity borrowing is deductible only in specific circumstances.
If your loan-to-value has fallen below 80%, the PMI calculator covers getting mortgage insurance removed. See our methodology for how these tools are built and tested.
Frequently asked questions
How do I calculate home equity?
Take what the house is worth and subtract every balance secured against it — first mortgage, any second, a drawn HELOC, and any other liens. What is left is your equity.
The important part is including everything. A tax lien or a contractor lien reduces equity exactly as a mortgage does.
What is combined loan-to-value and why does it matter?
It is all of the debt secured against the property divided by its value. It matters because a second-lien lender is behind the first mortgage if the house is sold in foreclosure, so what they can lend depends on the total, not just on the first mortgage.
It is the ratio that determines home equity borrowing capacity.
How much of my equity can I borrow?
Lenders typically cap combined loan-to-value somewhere between 80% and 90%, though products and lenders vary. That ceiling less what you already owe is the arithmetic limit.
Whether you get it also depends on income, credit, and the appraisal, so treat the figure here as a maximum rather than an expectation.
Does my online home value estimate count?
For your own planning, yes, with caution. For a lender, no — they will order an appraisal or an automated valuation and use that figure.
Automated estimates can be well off for unusual properties or in areas with few comparable sales. Run a lower figure as well and see whether the plan still works.
What does it mean to be underwater on a mortgage?
It means the balance exceeds the value, so equity is negative. Selling would require bringing cash to closing, and most refinancing is unavailable until the position improves.
It does not affect a mortgage you are paying on time, and every payment reduces it.
Is home equity the same as what I would get from selling?
No, and the difference is often five to eight percent of the value. Agent commission, transfer taxes, and any repairs come out of the proceeds before you see them.
The rent vs buy calculator models sale proceeds after those costs.
Related calculators
This calculator is provided for general educational and estimation purposes only and is not lending, financial, or real estate advice. The home value used is your own estimate; a lender will order its own valuation and it may come in lower, which changes every figure here. Nothing on this page is a lending decision or an offer.