How is home equity calculated?

Home equity equals the current market value of your home minus the outstanding loan balance. If your home is worth $500,000 and you owe $300,000 on the mortgage, your equity is $200,000. Equity grows through principal payments, home value appreciation, and improvements you make.

How much equity can I borrow against?

Most lenders let you borrow up to 80% to 85% of your home's value, minus what you owe. Using the example above: with 85% CLTV, you could borrow up to $125,000 (85% of $500,000 minus the $300,000 you owe). Some lenders cap at 80% for the best rates.

What's the difference between HELOC and home equity loan?

A HELOC is a revolving line of credit with a variable rate — you draw what you need and pay interest only on what you use. A home equity loan is a lump sum with a fixed rate and fixed monthly payment, similar to a second mortgage. See our HELOC vs Home Equity Loan comparison.

Home Equity Calculator (2026) — Estimate How Much You Can Borrow

Your Home

Home Price

Current Mortgage Balance

Credit Score

Your Home Equity$200,00040.0% of home value

Max HELOC Available$0

Est. HELOC Rate8.0%

Interest-Only Payment$0/mo

HELOC amounts and rates vary by lender. These are estimates based on typical lending standards.

What is home equity?

Home equity is the portion of your property you actually own — the difference between your home's current market value and the unpaid balance on your mortgage. If your home is worth $600,000 and you owe $250,000 on your mortgage, you have $350,000 in equity, meaning you own roughly 58% of the property outright. Equity grows through three things: regular principal payments (which slowly reduce your balance), home value appreciation over time, and improvements you make that raise the property's market value. Equity is a powerful financial tool — it can be borrowed against, used as collateral, or accessed tax-free when you sell.

How to use this calculator

Enter your home's current market value (estimate from recent comps or a quick appraisal).
Enter your remaining mortgage balance (check your latest statement or call your servicer).
Optionally add the loan limits for a HELOC or home equity loan you want to qualify for.
Click Calculate to see your equity, available-to-borrow, and CLTV (combined loan-to-value).

Understanding your results

The calculator shows three key numbers: your home equity (value minus balance), your available credit if you took out a HELOC at the lender's typical 80% CLTV cap, and your current CLTV ratio. CLTV is what lenders actually underwrite against — most lenders allow a maximum CLTV of 80% to 85% for home equity products. If your CLTV is under 50%, you have excellent borrowing capacity. If it's near 75–80%, you've maxed out typical HELOC eligibility.

What can you do with home equity?

Home improvement — most common use. Renovations that increase home value are tax-smart borrowing (interest may be deductible).
Debt consolidation — pay off higher-rate credit cards or personal loans at a lower HELOC rate.
Emergency fund — open a HELOC as a financial safety net (only draw if needed).
Large expenses — wedding, medical bills, college tuition.
Investment — some investors use HELOCs to fund other investments (consult a tax advisor — interest deductibility depends on use).

Frequently asked questions

How long does it take to build equity? Monthly payments build equity slowly at first (most goes to interest). In a 30-year mortgage, by year 5 you've typically built about 8–10% equity through payments, plus whatever appreciation has occurred.

Do I need an appraisal? For a HELOC or home equity loan, yes — the lender will order one. Some lenders do desktop appraisals or waive them for small credit lines under $50,000.

Is HELOC interest tax-deductible? Interest on a HELOC is deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan. Consult a tax professional for your situation.

Home Equity Calculator