Home Equity Calculator
Calculate home equity in dollars and percentage from property value and mortgage balance.
Returns LTV ratio and whether you qualify for PMI removal at 80% LTV.
Home equity is the portion of your home’s value that you actually own outright — the difference between what it’s worth and what you still owe on it. It grows through mortgage payments and property appreciation.
Basic Equity Formula:
Home Equity = Current Market Value − Outstanding Mortgage Balance
Loan-to-Value Ratio (LTV):
LTV = Outstanding Mortgage / Current Market Value × 100%
Lenders use LTV to determine borrowing eligibility. Most HELOCs and Home Equity Loans require LTV ≤ 85% (leaving 15%+ equity untouched).
Maximum Borrowable Equity:
Max HELOC/Loan = (Current Value × 0.85) − Outstanding Mortgage
Equity Growth Over Time:
After each mortgage payment: New Equity = Old Equity + Principal Paid + Appreciation
Worked Example:
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Original purchase: $320,000 (2019)
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Down payment: $64,000 (20%)
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Mortgage after 5 years: $240,000 principal paid down to $214,800
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Current market value (3%/yr appreciation): $320,000 × (1.03)^5 = $371,041
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Current Equity = $371,041 − $214,800 = $156,241
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LTV = $214,800 / $371,041 = 57.9% (well under 85%)
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Max HELOC = ($371,041 × 0.85) − $214,800 = $315,385 − $214,800 = $100,585
Uses of Home Equity: Renovation (adds value), debt consolidation, education, emergencies. HELOC interest is tax-deductible only when used for home improvement (IRS Publication 936). Treat equity like a savings account with strings attached — tapping it carelessly risks foreclosure.