Home Equity Calculator
Find out how much equity you have in your home and how it will grow over time.
How Home Equity Works
Home equity is the portion of your property that you truly own — the difference between your home's current market value and your outstanding mortgage balance. For example, if your home is worth $400,000 and you owe $280,000, your equity is $120,000, or 30% of the home's value. Building equity is one of the primary financial benefits of homeownership, as it represents real wealth you can tap through a home equity loan, HELOC, or cash-out refinance.
Your equity grows in two ways: through regular mortgage payments that reduce your loan balance, and through home value appreciation. When you use our mortgage calculator to plan your monthly payments, part of each payment goes toward principal reduction — that directly increases your equity. Historically, U.S. home values have appreciated about 3–4% annually on average, though this varies significantly by location and market conditions.
The Loan-to-Value (LTV) ratio is the flip side of equity: LTV = loan balance ÷ home value × 100. Lenders use LTV to assess risk. An LTV above 80% typically requires Private Mortgage Insurance (PMI). Most lenders will let you borrow up to a Combined LTV (CLTV) of 80%, meaning your total debt (existing mortgage + new home equity loan) cannot exceed 80% of the home's value. Our loan calculator can help you model repayment scenarios for a home equity loan.
The borrowable equity shown here is based on the standard 80% CLTV limit: Borrowable = Home Value × 80% − Loan Balance. If your equity is negative (you owe more than your home is worth), you are "underwater" — a situation that can occur after a housing market downturn. In that case, refinancing or a home equity loan won't be available until your equity recovers. Paying down extra principal or waiting for appreciation are the main paths back to positive equity.