Home Equity Calculator: How Much Equity Can You Borrow?
Home equity calculator
The 85% setting is an example to test with, not a program limit. Each lender and program sets its own maximum; try a few values.
Estimate only, based on the values you entered. The actual amount depends on an appraisal or automated valuation, your credit, income, debts, property type and program guidelines. Not a loan offer.
How home equity is calculated
When people ask "how much equity do I have?", they usually mean one of two numbers:
| Number | Formula | What it tells you |
|---|---|---|
| Total home equity | Home value − all loan balances | How much of your home you own outright |
| Borrowable equity | (Home value × max CLTV) − all loan balances | Roughly how much a lender might let you borrow |
"All loan balances" means every loan secured by the home: your first mortgage, any existing HELOC or home equity loan, and any other liens. The CLTV cap is set by each lender and program and can differ for primary homes, second homes and investment properties.
Home equity calculator example
Sample numbers for illustration only. The 85% CLTV is an example setting, not a program limit.
A home is worth $400,000 and has a $220,000 mortgage and no other loans.
| Total equity | $400,000 − $220,000 = $180,000 (45% of the home's value) |
| Current combined LTV | $220,000 ÷ $400,000 = 55% |
| Maximum total loans at 85% CLTV | $400,000 × 85% = $340,000 |
| Estimated borrowable equity | $340,000 − $220,000 = $120,000 |
How much home equity can you borrow at different CLTV limits?
The CLTV limit makes a big difference. Using the same $400,000 home with a $220,000 mortgage:
| CLTV limit (example) | Maximum total loans | Estimated borrowable equity |
|---|---|---|
| 70% | $280,000 | $60,000 |
| 75% | $300,000 | $80,000 |
| 80% | $320,000 | $100,000 |
| 85% | $340,000 | $120,000 |
| 90% | $360,000 | $140,000 |
These are examples only. Some programs allow higher limits and many allow less, especially for larger loan amounts, lower credit scores or non-primary homes. For VA cash-out refinances, VA loan rules allow up to 90% LTV for eligible borrowers; see the VA home loans site for program details.
How to estimate your home's value
Your equity estimate is only as good as the home value you enter. A few ways to get a realistic number:
- Recent sales nearby. Look at homes similar in size, age and condition that sold in your neighborhood in the last few months.
- Online estimates. Automated estimates are a quick starting point, but they can be off in either direction, especially for unique homes.
- Price trends. The Federal Housing Finance Agency publishes a House Price Index showing how values have moved in your state and metro area.
- Be conservative. If you're unsure, test a lower value in the calculator. For a loan, the lender confirms value with an appraisal or, with some programs, an automated valuation.
Ways to use your home equity
| Option | How it works | Keeps your current mortgage? |
|---|---|---|
| HELOC | A credit line you draw from as needed; variable and fixed-rate versions exist | Yes |
| Home equity loan | One lump sum, usually at a fixed rate | Yes |
| Cash-out refinance | Replaces your mortgage with a larger one and pays you the difference | No |
If you have a low rate on your first mortgage, a HELOC or home equity loan lets you tap equity without replacing it. A cash-out refinance can make sense when current rates are near or below your existing rate, or when you want one loan instead of two. Estimate a line-of-credit payment with our HELOC payment calculator, or read whether to use a home equity loan for debt consolidation.
Common reasons homeowners tap their equity
- Paying off high-interest debt such as credit cards or personal loans.
- Home improvements like a kitchen, roof, addition or energy upgrades, which can add value to the home.
- Education costs or other large planned expenses.
- An emergency cushion, using a HELOC you draw from only if needed.
Because your home secures the loan, borrowing against it puts the home at risk if you can't make the payments. The FTC's guide to home equity loans and lines of credit covers what to compare and warning signs to watch for.
What lenders look at besides equity
| Factor | What lenders review |
|---|---|
| Credit score | Each lender sets its own minimum; our site focuses on homeowners with 600+ credit. Check your reports free at AnnualCreditReport.com. |
| Debt-to-income ratio | Your monthly debts compared with your income. The CFPB explains how DTI works. |
| Home value | Confirmed by an appraisal or, with some programs, an automated valuation |
| Property type and occupancy | Primary homes, second homes and investment properties are treated differently |
| Income | Verified with pay stubs, W-2s or tax returns; some programs accept bank statements for self-employed borrowers |
How your home equity changes over time
Equity grows two ways: you pay down your loan balance, and your home's value may rise. It can also shrink if values fall or you add new loans. Here's a hypothetical example of a $400,000 home with a $220,000 mortgage, assuming the balance drops about $6,000 a year and the value stays flat:
| Year | Mortgage balance | Total equity | Borrowable at an 85% CLTV example |
|---|---|---|---|
| Today | $220,000 | $180,000 | $120,000 |
| Year 2 | $208,000 | $192,000 | $132,000 |
| Year 5 | $190,000 | $210,000 | $150,000 |
If the home's value also rises, equity grows faster. If values fall, the amount you can borrow drops even though you've been paying down the loan. That's why lenders confirm value at the time you apply rather than relying on what you paid for the home.
Home equity loan vs HELOC vs cash-out refinance: which uses your equity best?
| If you… | Often a good fit | Why |
|---|---|---|
| Know the exact amount you need and want a fixed payment | Home equity loan | One lump sum, predictable payment, keeps your first mortgage |
| Have costs spread out over time or want a safety net | HELOC | Draw only what you need and pay interest only on what you use |
| Want one loan, or current rates are near your existing rate | Cash-out refinance | Replaces your mortgage with one new loan and pays you the difference |
| Have a very low first-mortgage rate | HELOC or home equity loan | You keep your low rate on the first mortgage and only borrow the new amount at the new rate |
The CFPB's HELOC brochure compares lines of credit with other ways to borrow and lists questions to ask any lender.
Mistakes to avoid when borrowing against home equity
- Overestimating your home's value. Plan with a conservative number so the final amount isn't a surprise.
- Borrowing the maximum just because you can. Your home secures the loan, so borrow only what you need and can comfortably repay.
- Ignoring closing costs and fees. Origination, appraisal, title and annual fees reduce what you actually receive.
- Forgetting about payment changes. Variable-rate HELOC payments can rise, and interest-only payments increase when repayment begins.
- Consolidating debt without a plan. Paying off cards with equity only helps if the cards don't fill back up.
- Skipping the comparison. Rates, fees and CLTV limits vary between lenders, so compare more than one offer.
Taxes and home equity borrowing
Interest on a home equity loan or HELOC is generally deductible only if you itemize and use the money to buy, build or substantially improve the home that secures the loan. Interest on money used for other purposes, such as paying off credit cards, generally isn't deductible. See IRS Publication 936 and talk with a tax professional about your situation.
What to have ready before you tap your home equity
Once the home equity calculator shows you have room to borrow, having these items ready can speed things up:
- Your most recent mortgage statement showing the current balance, plus statements for any other loans on the home.
- Proof of income, such as recent pay stubs and W-2s, or tax returns and bank statements if you're self-employed.
- Homeowners insurance details for the property.
- A list of your monthly debts so you can estimate your debt-to-income ratio.
- A clear goal and amount. Knowing whether you need a lump sum or flexible access helps narrow down the right option quickly.
You can also check your credit reports for errors before you apply. Fixing a mistake early can help you qualify for better terms, and it's free to request your reports from each of the three nationwide credit bureaus.
How to build home equity faster
- Make extra principal payments on your mortgage; even small amounts add up.
- Improve the home in ways that raise its market value.
- Avoid adding new liens you don't need.
- Let time work: each regular payment reduces principal, and home values in many areas rise over time, though they can also fall.
Frequently asked questions
How much equity do I have in my home?
Subtract everything you owe on the home from its current market value. For example, a $400,000 home with a $220,000 mortgage has $180,000 in equity. The home equity calculator above does this for you.
How much equity do you need for a HELOC?
Lenders look at your combined loan-to-value after the new line. Each lender sets its own maximum, so the equity you need depends on the program as well as your credit and income.
How much equity can I borrow?
Roughly your home value times the lender's maximum combined LTV, minus what you already owe. Your credit, income and property also affect the final amount.
What is combined loan-to-value (CLTV)?
CLTV is the total of all loans secured by your home divided by the home's value. For example, $300,000 in total loans on a $400,000 home is a 75% CLTV.
Do I need an appraisal to find out my home's value?
For an estimate, no; you can use recent sales of similar homes. For a loan, lenders confirm the value with an appraisal or, with some programs, an automated valuation.
Can I borrow home equity with a lower credit score?
Some programs work with credit scores in the 600s, though the amount you can borrow and the rate usually depend on your score. Each lender sets its own minimums.
Is a home equity loan or a HELOC better?
A home equity loan gives you one lump sum, usually at a fixed rate. A HELOC is a line you draw from as needed. If you know the exact amount you need, a loan is simpler; if your costs will be spread out, a HELOC is more flexible.
How long does it take to get money from home equity?
It depends on the program and whether an in-person appraisal is needed. Some lenders we work with can fund certain HELOCs in a matter of days after approval, while a full appraisal and underwriting process can take several weeks.
Can I use home equity on an investment property or second home?
Some programs allow it, but limits are usually lower than for a primary home, and fewer lenders offer it. Enter the property's value and loans in the calculator and test a lower CLTV to see a conservative estimate.
Does checking my equity affect my credit?
No. This calculator doesn't pull credit or collect any personal information.
Related guides and tools
Sources
- Federal Trade Commission: Home Equity Loans and Home Equity Lines of Credit
- Consumer Financial Protection Bureau: What is a home equity loan?
- Consumer Financial Protection Bureau: What is a debt-to-income ratio?
- Federal Housing Finance Agency: House Price Index
- U.S. Department of Veterans Affairs: VA Home Loans