Home Equity Calculator
Measure the equity you hold, trace where it came from, and find how much a lender will actually release — which is always less than the equity itself.
Home Equity Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Depends entirely on the value entered; a lender's valuation may differ and is usually more conservative.
- Caps vary by lender, product, occupancy and credit profile.
- Does not price the resulting loan or its payments.
In short: Equity is value minus what you owe. On a 430,000 home with a 248,000 balance that is 182,000, an LTV of 57.67%. But at a typical 85% combined cap only 117,500 is borrowable — 64,500 stays locked by the cap.
Formula
equity = value − all secured liens
borrowable = value × max CLTV − existing liens
[('value', 'current market value, not the purchase price'), ('liens', 'first mortgage plus any second charge or HELOC'), ('max CLTV', 'the combined cap a lender will advance to'), ('borrowable', 'what can actually be released, always less than equity')]
Worked Example
- Establish the current market value, not what you paid.
- Total every secured lien against the property.
- Subtract to find the equity you hold.
- Apply the lender's combined cap to the value and deduct existing debt for the borrowable amount.
- Note the difference — that is equity the cap keeps locked.
A 430,000 home with a 248,000 first mortgage holds 182,000 of equity at a 57.67% LTV. At an 85% combined cap the lender would advance 117,500, leaving 64,500 locked — exactly the 15% of value the cap reserves. Tracing the sources: 70,000 was the original deposit, 32,000 has been repaid as principal, and 80,000 came from appreciation the market granted and could withdraw.
Strengths & Limits Of This Model
Where this engine is strong
- Separates equity held from equity a lender will release
- Traces equity to deposit, repayment and appreciation
- Shows the locked slice the cap reserves
Where it stops
- Valuation-dependent
- Does not price a loan
Practical Use Cases
Planning a refinance
Establishing how much can be released before applying.
Deciding whether to sell or borrow
Comparing the equity realisable by sale against by borrowing.
Tracking net worth
Measuring the genuine equity position rather than the headline value.
Testing a price fall
Seeing how much of the equity is appreciation the market could reclaim.
Confirming PMI removal
Checking whether the loan-to-value has crossed the conventional threshold.
Methodology & Editorial Standards
Equity is value less every secured lien; borrowable equity applies the combined cap to value and deducts existing debt, which is how lenders actually size a second charge. The locked portion is shown explicitly and equals value multiplied by one minus the cap, an exact relationship. Sources of equity are decomposed into deposit, principal repaid and appreciation, and these three sum to the total by construction.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Home Equity Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
How is home equity calculated?
Current market value minus every lien secured against the property. Use a realistic value — an automated estimate or recent comparable sales — rather than the price you paid or the figure you would like. Equity is always measured against today's value.
Why can't I borrow all my equity?
Because lenders cap the combined loan-to-value, typically at eighty to eighty-five per cent. The reserved slice is their protection against a fall in prices and against the cost of repossession. On a 430,000 property an eighty-five per cent cap permanently reserves 64,500 of value that can only be reached by selling.
What is the difference between equity and borrowable equity?
Equity is what you own. Borrowable equity is what a lender will advance against it after applying their cap. The second is always smaller, and the gap widens as the cap tightens — which typically happens in exactly the market conditions where people most want to borrow.
Does this page price a home equity loan?
No. This one measures the equity and what can be released against it. For the monthly payment, term and total interest on a fixed-rate second mortgage, use the Home Equity Loan Calculator in the mortgage section — measuring and pricing are separate questions.
Where does equity come from?
Three places: the deposit you paid, the principal you have repaid, and appreciation. The mix matters. Deposit and repaid principal are capital you provided; appreciation was granted by the market and can be withdrawn by it. Equity that is mostly appreciation is more fragile than the same figure built from repayments.
What is negative equity?
Owing more than the property is worth. It arises after a price fall, especially on a high loan-to-value purchase, and it means the property cannot be sold without bringing cash to the closing. It also blocks refinancing, which is when borrowers most need it.
Does a HELOC count against my equity?
The drawn balance certainly does. Many lenders go further and count the full approved limit even if undrawn, because you could draw it tomorrow. That treatment is called HCLTV and it can materially reduce what a new lender will advance — the Combined Loan To Value Calculator covers it.
Should I use an appraisal or an online estimate?
An online estimate is adequate for planning; a lender will require a formal valuation and may reach a different, usually more conservative, figure. Model at the lower end, because a valuation that disappoints reduces borrowable equity at the full cap rate.
Is borrowing against equity a good idea?
It depends entirely on the use. Borrowing to acquire an appreciating or income-producing asset can be sound; borrowing for consumption converts an asset into a secured debt with nothing to service it. Either way the loan is secured on your home, so the consequence of not repaying is not merely financial.
How quickly does equity build?
Slowly at first on an amortising loan, because early payments are overwhelmingly interest. On a thirty-year mortgage only around six per cent of the balance is typically repaid in the first five years. In most rising markets appreciation builds equity faster than amortisation does — which is precisely why equity can vanish when the market turns.