Answer: Enter your values and the Home Equity Calculator returns the exact result instantly — formula, worked example, and a plain-English explanation are included below the tool.
See how much equity you've built and how much a lender would let you borrow
| Product | Typical Max CLTV | What Lenders Check |
|---|---|---|
| HELOC | 80% – 90% | Credit score (often 680+), DTI under ~43% |
| Home equity loan | 80% – 85% | Credit score (often 660+), DTI, payment history |
| Conventional cash-out refinance | 80% | Credit score 620+, DTI, full underwriting |
| VA cash-out refinance | Up to 90% | COE, credit, residual income test |
| FHA cash-out refinance | 80% | Credit score 500+, 12 months on-time payments |
| After Year | Principal Paid Off (Equity from Payments) |
|---|---|
| 1 | ≈ $4,500 |
| 5 | ≈ $25,600 |
| 10 | ≈ $60,900 |
| 15 | ≈ $109,800 |
Payments alone build equity slowly in the early years because most of each payment goes to interest. Home-price appreciation usually adds far more; even 3% a year on a $500,000 home is $15,000 of new equity annually.
Home equity is the slice of your home you actually own: the market value minus everything you still owe on it. It's the number behind every HELOC offer, home equity loan quote, and cash-out refinance. This calculator shows your equity in dollars and percent, plus the figure lenders really care about, which is how much room you have under their loan-to-value limit.
Equity = home value − (mortgage balance + any second lien). Equity percentage = equity ÷ value. Your combined LTV (CLTV) is the mirror image: total debt ÷ value. The borrowing math is where the lender's cap comes in: available to borrow = (value × max LTV) − total debt. If that comes out negative, you're over the limit and can't borrow more against the house yet.
Enter your home's current value (a recent appraisal or a realistic market estimate), your mortgage balance from your latest statement, and any second lien such as an existing HELOC. Then pick the lender limit: 80% is the most common cap, while some HELOC lenders stretch to 85% or 90%. Flip between the three options to see how much the limit itself changes your borrowing power. If you're not sure of your home's value, check a couple of recent sales of similar homes nearby and use the conservative end of the range, since the lender's appraiser probably will too.
A $500,000 home with a $280,000 mortgage and no second lien has $220,000 in equity, which is 44% of the home's value, and a CLTV of 56%. At an 80% max LTV, the lender's ceiling is $400,000 of total debt, so you could borrow up to $120,000 more. At an 85% limit that rises to $145,000. Notice you can't touch the full $220,000; the lender always leaves an equity cushion in the deal.
Three levers change the number, and they don't pull equally. The table below starts from that same $500,000 home with $280,000 owed and an 80% limit ($120,000 available), then moves each lever by $10,000:
| Lever | Effect on available equity | Why |
|---|---|---|
| Home value up $10,000 | +$8,000 | The 80% cap only lets you borrow 80 cents of each new dollar of value |
| Extra $10,000 principal paid | +$10,000 | Paying down debt raises the ceiling dollar for dollar |
| Appraisal comes in $10,000 low | −$8,000 | Same math in reverse — lenders use their number, not yours |
That's the quiet argument for extra principal payments: a dollar paid on the mortgage builds borrowing power faster than a dollar of appreciation does, and it works even in a flat market. It also cuts the interest you'd otherwise pay, so it helps twice. For the longer game of building equity from scratch, the how to build home equity guide walks through the timing.
Equity isn't guaranteed — it shrinks when values drop or when you draw against the house again. Here's the same $500,000 home ($280,000 owed) through a downturn:
| Home value | Equity | CLTV | Available at 80% |
|---|---|---|---|
| $500,000 (today) | $220,000 | 56.0% | $120,000 |
| $450,000 (−10%) | $170,000 | 62.2% | $80,000 |
| $400,000 (−20%) | $120,000 | 70.0% | $40,000 |
| $350,000 (−30%) | $70,000 | 80.0% | $0 |
| $300,000 (−40%) | $20,000 | 93.3% | $0 |
A 30% price drop wipes out all borrowing room at 80% even though the owner still has $70,000 of equity on paper. Underwater — owing more than the home is worth — doesn't arrive until the value falls below the debt, which for this example takes a 44% decline. The risk isn't symmetrical either: every dollar drawn on a HELOC moves you one row down this table, which is why lenders re-check value at every draw and why a fully drawn line leaves no cushion at all. The HELOC vs cash-out refinance guide compares the two main ways to tap what you have.
Slowly at first. On a $400,000 loan at 6.5%, you pay off only about $4,500 of principal in year one, because early payments are mostly interest. The pace accelerates every year, and home-price appreciation stacks on top. Most owners build equity faster through rising values than through payments in the first decade.
Three main products: a HELOC (a credit line you draw as needed), a home equity loan (a lump sum at a fixed rate), and a cash-out refinance (a new, bigger first mortgage). Lenders cap total borrowing at 80% to 90% of your home's value, so you can never tap every dollar of equity.
Yes, directly. The lender lends against the appraised value, not your Zillow estimate or what the neighbor's house sold for. Every $10,000 the appraisal comes in low cuts your borrowing power by $8,000 at an 80% limit. If the number seems wrong, you can dispute it or try another lender.
A HELOC suits ongoing or uncertain costs, since you draw only what you need and pay interest on that. A home equity loan fits a one-time known expense with a fixed rate and payment. A cash-out refinance replaces your whole mortgage, which only makes sense if the new rate beats your current one.
No. Lenders cap total borrowing at a combined loan-to-value limit, usually 80% of the appraised value, so on a $500,000 home with $280,000 owed you have $220,000 of equity but only about $120,000 of borrowing room. The rest is the cushion the lender keeps in the deal. On top of that limit, your credit score and debt-to-income ratio can shrink what you actually qualify for.
Yes. Prices can fall, your balance can rise if you draw on a HELOC, or both at once. A $500,000 home with $280,000 owed keeps positive equity until values drop 44%, but the borrowing power hits zero at a 30% drop. The 2008-2012 period left millions of owners underwater — owing more than their homes were worth — which is why lenders leave that equity cushion and why you shouldn't borrow right up to the cap.