Home Equity Calculator
Calculate your home equity and estimate how much you can borrow with a HELOC.
Your Home
HELOC amounts and rates vary by lender. These are estimates based on typical lending standards.
What is home equity?
Home equity is what you actually own in a property: the current market value minus the unpaid balance on every loan secured by it. If the house is worth $600,000 and you owe $250,000 on the mortgage, equity is $350,000 — 58.3% of the property — and your loan-to-value ratio is 41.7%. Equity is not cash. It sits inside the house until you sell, refinance, or borrow against it, and the amount a lender will let you extract is smaller than the equity itself, because credit lines are capped at a percentage of value rather than at what you own.
Three forces move equity. Principal payments reduce the balance, but slowly at first: the first year of a $400,000 30-year at 6.5% repays only $4,471 of principal, leaving $395,529 owed after twelve payments, and five full years of payments remove $25,556. Appreciation usually does more of the work — the same $600,000 house rising 3% a year adds $18,000 in the first twelve months alone. Improvements add whatever the market pays for them, which is rarely the full project cost, so treat a kitchen remodel as a partial investment rather than a dollar-for-dollar one.
Because equity is illiquid, it becomes useful only through a product: a HELOC, a home equity loan, a cash-out refinance, or a sale. Each path is priced and capped differently. The standard ceiling is an 80% combined loan-to-value ratio — on $600,000 of value that is $480,000 of total secured debt, so a household owing $250,000 can access $230,000, not the full $350,000. Some lenders go to 85% for a primary residence with strong credit, which raises the ceiling to $510,000 and the borrowing capacity to $260,000. Everything else on this page follows from that one ratio.
How to use this calculator
- Enter your home's current market value — recent comparable sales or a broker opinion, not what you paid and not the tax assessment.
- Enter your remaining mortgage balance from the latest statement, or call the servicer for a payoff figure.
- Add any other debt secured by the same property: an existing HELOC, a home equity loan, or a second mortgage. All of it counts against the combined limit.
- Enter the combined loan-to-value cap your lender uses. 80% is the standard; some primary-residence programs allow 85%.
- Click Calculate to see your equity, loan-to-value, combined loan-to-value, and the amount you can still borrow.
A realistic input set: $600,000 value, $250,000 mortgage, and a $50,000 HELOC already open. The calculator returns $350,000 of equity, a 41.7% loan-to-value ratio, and a 50.0% combined loan-to-value — total secured debt of $300,000 against $600,000 of value. At the 80% cap the household may carry $480,000 of secured debt, so $180,000 of the credit line remains available. Expect the lender to verify value with an appraisal costing $300 to $600, although some waive it for desktop valuations or credit lines under $50,000.
How it is calculated
Four numbers drive every home equity decision, and each is one line of arithmetic. Equity is market value minus all secured balances. Loan-to-value is the mortgage balance divided by value. Combined loan-to-value is every secured balance divided by value — this is the figure lenders actually underwrite against. Borrowing capacity is the lender's cap minus what is already owed:
Capacity = (CLTV limit × current value) − existing secured balances
Worked example: $600,000 value, $250,000 mortgage, $50,000 HELOC
Step 1: equity is $600,000 − $250,000 = $350,000, which is $350,000 ÷ $600,000 = 58.3% of the property. Step 2: loan-to-value is $250,000 ÷ $600,000 = 41.7%. Step 3: total secured debt is $250,000 + $50,000 = $300,000, so combined loan-to-value is $300,000 ÷ $600,000 = 50.0%. Step 4: at the 80% cap, $600,000 × 0.80 = $480,000 of allowed total debt, and $480,000 − $300,000 = $180,000 still available. At an 85% cap, $600,000 × 0.85 = $510,000 − $300,000 = $210,000 available.
Step 5 prices the money. Borrowing $100,000 on a HELOC at 8.5% during the interest-only draw costs $100,000 × 0.085 ÷ 12 = $708.33 a month, and ten years of those payments is $85,000 of interest with no principal reduced. A fixed home equity loan of $100,000 at 8.25% over 15 years costs $970.14 a month — 180 payments totaling $174,625, so $74,625 of interest. Closing costs run 2% to 5% of the amount borrowed, or $2,000 to $5,000 on $100,000, which is why the product you choose matters as much as the rate you are quoted.
Worked scenarios
Equity position decides eligibility before rate ever enters the conversation. The tables below hold the lender rules constant so you can see how value, balance, and product choice change the outcome.
Equity positions and borrowable amounts
| Home value | Mortgage balance | Equity | Loan-to-value | Capacity at 80% | Capacity at 85% |
|---|---|---|---|---|---|
| $600,000 | $250,000 | $350,000 | 41.7% | $230,000 | $260,000 |
| $750,000 | $400,000 | $350,000 | 53.3% | $200,000 | $237,500 |
| $450,000 | $340,000 | $110,000 | 75.6% | $20,000 | $42,500 |
| $500,000 | $475,000 | $25,000 | 95.0% | $0 | $0 |
The first two rows hold equity constant at $350,000 and show that the higher-value, higher-balance household can borrow $30,000 less at the same cap — the ratio, not the dollar equity, is what is underwritten. The last row is the one that surprises people: $25,000 of real equity produces no borrowing capacity at all, because the $475,000 balance already sits above the $400,000 ceiling on a $500,000 home.
HELOC versus home equity loan
| Feature | HELOC | Home equity loan |
|---|---|---|
| Rate | Variable, indexed to prime | Fixed for the full term |
| Structure | 10-year draw, then 20-year repayment | Lump sum, 15-year term typical |
| Payment on $100,000 | $708.33 interest-only, then $867.82 | $970.14 from the first month |
| Closing costs | Often waived; annual fees common | 2% to 5%, or $2,000 to $5,000 per $100,000 |
| Best for | Open-ended or uncertain funding needs | One defined project with a fixed budget |
The HELOC's payment advantage during the draw period is real but temporary: interest-only payments reduce nothing, and the same $100,000 must still be repaid over the following 20 years. The fixed loan costs more per month and $74,625 of interest over 15 years at 8.25%, in exchange for a payment that never moves.
What $100,000 of home equity costs
| Product phase | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| HELOC draw period | 8.5% variable | 120 months, interest-only | $708.33 | $85,000 |
| HELOC repayment | 8.5% variable | 240 months | $867.82 | $108,278 |
| Home equity loan | 8.25% fixed | 180 months | $970.14 | $74,625 |
Over the full 30 years, the HELOC route consumes $193,278 of interest while the fixed loan consumes $74,625 — but the HELOC lets you borrow $20,000, draw nothing, and pay nothing beyond a small annual fee. The right comparison is the one matched to how the money will actually be used.
Key details and requirements
- Combined loan-to-value cap. 80% is the standard on both HELOCs and home equity loans; some lenders allow 85% on a primary residence with strong credit. On $600,000 of value the difference between the two caps is $30,000 of borrowing capacity.
- HELOC timeline. A 10-year draw period followed by a 20-year repayment period — 30 years total. Payments during the draw are commonly interest-only, so budget for the repayment payment of $867.82 on a $100,000 balance rather than the $708.33 you start with.
- Closing costs. 2% to 5% on a home equity loan — $2,000 to $5,000 per $100,000 borrowed. HELOCs frequently advertise no closing costs, but charge annual fees of $75 to $100 and early-closure fees if the line is closed within two to three years.
- Rates in these examples. The HELOC figures use 8.5% and the fixed home equity loan figures use 8.25%. HELOC rates float with the prime rate, so the payment you qualify on today is not the payment you keep; fixed loans lock the rate for the entire term.
- Appraisal. $300 to $600 for a full report, ordered by the lender. Desktop valuations and waivers exist for smaller credit lines, commonly under $50,000.
- Credit and debt ratios. 680 or higher earns meaningfully better pricing, and lenders typically want total debt-to-income at 43% to 45% or below, counting the new payment.
- Tax treatment. Interest on a home equity loan or HELOC is deductible only when the funds are used to buy, build, or substantially improve the home that secures the loan. Keep invoices and receipts.
- How fast equity builds. On a $400,000 30-year at 6.5%, year 1 repays $4,471 of principal and leaves $395,529 owed; five years removes $25,556 and ten years remove $60,895. Appreciation, not payments, is usually the larger driver.
Tips for 2026
- Run the cap math before you shop. A $450,000 home with $340,000 owed shows $110,000 of equity and only $20,000 of capacity at 80% — a line that small is barely worth an appraisal. Know the number before you collect quotes.
- Match the product to the purpose. A kitchen remodel with a fixed bid belongs on a home equity loan at 8.25% with a payment of $970.14 on $100,000; an open-ended need that may never be drawn belongs on a HELOC you leave undrawn. Variable rates are acceptable for short, planned exposure — not for balances you expect to carry for a decade.
- Price the consolidation trade honestly. $50,000 of credit card debt at 22% costs about $11,000 a year in interest; the same balance on a HELOC at 8.5% costs $4,250 — a $6,750 annual difference. It only works if the cards stay paid off and closed; otherwise you have converted dischargeable debt into debt secured by your house.
- Compare fee structures, not just rates. A no-closing-cost HELOC usually carries an annual fee and a two- to three-year closure penalty, while a fixed loan charges 2% to 5% up front — $2,000 to $5,000 per $100,000. On a $100,000 balance held for six years, the cheaper headline can lose after fees.
- Keep a separate cash reserve. A HELOC is a useful backstop, but lenders can suspend or reduce an unused line — a power written into most HELOC agreements. Do not treat the limit as an emergency fund you have already secured.
- Budget the repayment payment from day one. Interest-only payments of $708.33 during the draw period feel manageable, but the schedule steps to $867.82 when repayment begins. Sinking the difference — $159.49 a month — into principal during the draw shortens the term and removes the shock.
Common mistakes with home equity
- Using the wrong value. Purchase price, tax assessment, and zestimate-style estimates all drift from reality. Lenders underwrite against a current appraisal, and a $600,000 number that is really $540,000 cuts capacity at 80% from $230,000 to $170,000.
- Assuming equity equals borrowing power. $350,000 of equity on a $600,000 home with $250,000 owed yields $230,000 at the standard cap, not $350,000. The gap is the lender's cushion against falling values.
- Forgetting the second lien. An existing $50,000 HELOC is counted in the combined ratio. It moves this example from $230,000 of capacity to $180,000 without any change in equity.
- Budgeting the interest-only payment as permanent. $708.33 a month during the draw period becomes $867.82 during repayment, and the first repayment month still sends $708.33 to interest with only $159.49 to principal. Plan for the higher figure before you draw.
- Securing short-lived debt for a long time. Credit cards can be discharged in bankruptcy; a HELOC cannot, and missed payments risk the property itself. Consolidate only with a repayment plan and a timeline, not to buy monthly breathing room.
- Overlooking fees and fine print. Closing costs of 2% to 5%, annual fees of $75 to $100, appraisal charges of $300 to $600, and early-closure penalties inside two to three years all move the real cost of the line above the quoted rate.
Frequently asked questions
How much home equity do I need to borrow? Most lenders lend to an 80% combined loan-to-value cap. On a $600,000 home with $250,000 owed, that is $480,000 of allowed secured debt and $230,000 of capacity; at 85% the ceiling is $510,000 and capacity is $260,000. Roughly 20% equity is the practical threshold.
What is the difference between a HELOC and a home equity loan? A HELOC is a variable-rate line with a 10-year draw and 20-year repayment — $708.33 interest-only on $100,000 at 8.5%, then $867.82. A home equity loan is a fixed-rate lump sum over 15 years at $970.14, with closing costs of $2,000 to $5,000 per $100,000.
How much can I borrow with a HELOC? Multiply your home's value by the lender's cap, then subtract every secured balance. $600,000 × 0.80 = $480,000; minus a $250,000 mortgage and a $50,000 existing line leaves $180,000. The same household at an 85% cap would have $210,000 available.
Do I need an appraisal? Usually. Lenders order a full appraisal costing $300 to $600, though desktop valuation and waiver programs exist — most often for credit lines under $50,000. The value used is today's market value, not your purchase price or assessed value.
How fast does home equity build? Payments alone are slow: a $400,000 30-year at 6.5% repays $4,471 of principal in year 1, $25,556 after five years, and $60,895 after ten, leaving balances of $395,529, $374,444, and $339,105. Appreciation of 3% on a $600,000 house adds $18,000 in a single year.
Is HELOC interest tax-deductible? Interest is deductible only when the funds are used to buy, build, or substantially improve the home that secures the loan, and the interest cannot exceed the loan's balance. Keep documentation of how every draw was spent and confirm treatment with a tax professional.
What happens if home values fall? Capacity falls with them. If this $600,000 example drops to $500,000 while $250,000 is owed, the 80% ceiling becomes $400,000 and capacity falls from $230,000 to $150,000. Lenders can also freeze or reduce an unused line when appraised values decline.
What can I use home equity for? The common uses are renovation, consolidating higher-rate debt — $50,000 of 22% card debt costs about $11,000 a year against $4,250 at 8.5% — education or medical costs, and an emergency reserve. Deduction rules apply only to funds used on the securing home.