Home Equity Calculator
Calculate your home equity, loan-to-value ratio, and how much you could borrow against your home.
Home equity is the part of your home you actually own. I track mine annually alongside net worth, it's one of the largest line items for most homeowners. Knowing the LTV ratio also tells you whether you're still paying PMI unnecessarily and when a refi might make sense.
Most lenders allow borrowing up to 80–85% combined LTV (CLTV) for a HELOC or home equity loan. Your available credit is the difference between that threshold and your current mortgage balance.
What home equity is
Home equity is the market value of your home minus all outstanding liens against it, primarily your mortgage balance. If your home is worth $420,000 and you owe $285,000, you have $135,000 in equity (32%). Equity builds through mortgage principal payments, home appreciation, and any improvements that increase the property's value.
Loan-to-value ratio (LTV)
LTV is the ratio of what you owe to what the home is worth. At 68% LTV, you have 32% equity. Lenders use LTV to assess risk, lower LTV means more equity cushion and lower risk of the borrower being underwater. LTV below 80% typically eliminates PMI on conventional loans. LTV below 70% often qualifies for the best refinance rates.
How to access home equity
There are three primary ways to access equity: a HELOC (Home Equity Line of Credit) is a revolving credit line, like a credit card secured by your home, flexible but variable-rate. A home equity loan is a lump-sum fixed-rate loan at a fixed payment, predictable. A cash-out refinance replaces your existing mortgage with a larger one, taking the difference in cash, resets your amortization clock but can lock in a good rate on the whole balance.
When equity access makes sense
Accessing home equity at lower rates (currently 7–9% for HELOCs) to pay off higher-rate debt (20%+ credit cards) can make mathematical sense. Using equity for home improvements that increase the property's value creates a cycle of equity growth. Using it for vacations or consumer purchases converts an appreciating asset into consumption, generally not recommended. Risk: your home is the collateral. Defaulting on a HELOC can cost you the house.
PMI and the 80% threshold
If you bought with less than 20% down, you're likely paying PMI. Under the Homeowners Protection Act, lenders must automatically cancel PMI when the LTV reaches 78% based on the original amortization schedule. But you can request cancellation at 80% LTV if you can demonstrate current value supports it, often requiring an appraisal. If your home has appreciated significantly, a new appraisal showing 80%+ equity can eliminate PMI immediately and save hundreds per month.
Frequently asked questions
How do I find out my home's current value?
Automated valuation models (Zillow's Zestimate, Redfin, CoreLogic) give rough estimates but can be off by 5–15%. For a more accurate figure, review recent comparable sales in your neighborhood, or pay for a professional appraisal ($300–600). Lenders require a formal appraisal for any new loan or refinance.
Is home equity included in net worth?
Yes. Net worth = assets − liabilities. Your home at market value is an asset; your mortgage balance is a liability. The difference is equity, which flows into net worth. Many financial planners track liquid net worth separately (excluding home equity) to assess near-term financial flexibility.
Does a HELOC affect my credit score?
Opening a HELOC creates a hard inquiry (small temporary score impact) and adds a new credit account. Utilization of a HELOC does affect credit, high balances relative to the credit limit can lower scores. Keeping HELOC usage below 30% of the limit minimizes negative credit impact.