Home Equity Calculator

Home equity is the portion of your home's value that you own outright. It equals the current market value minus any outstanding mortgage or lien balances. Equity grows as you pay down your mortgage and as the home appreciates.

You can access equity through a Home Equity Loan (lump sum, fixed rate), HELOC (revolving credit line), or cash-out refinance. Each has different rates, fees, and payment structures.

Combined LTV (CLTV) = (all mortgages + home equity loan) / home value. Lenders typically cap CLTV at 80-85% for home equity loans and HELOCs. Higher CLTV means more risk for lenders and potentially higher rates for you.

As of 2018, interest is only deductible if the funds are used to buy, build, or substantially improve the home. Using equity for debt consolidation or other purposes no longer qualifies for the deduction.

Your home is the collateral. If you cannot repay, the lender can foreclose. Additionally, if home values fall, you could become underwater (owe more than the home is worth). Use home equity borrowing for value-adding purposes.

Equity builds through your down payment, mortgage principal payments, and appreciation. In early years, most payments are interest, so equity builds slowly. Appreciation often contributes more equity than payments in rising markets.