How It Works
Home equity is the market value of your home minus the debts secured by it. The loan-to-value ratio compares secured debt with the home value.
Potential borrowing capacity is not the same as equity: lenders may apply maximum LTV limits, credit requirements, income tests, and other conditions.
Formula
- V — Current home value
- D — Mortgage and other secured debt
- E — Home equity
Example
Example inputs: Home value $400,000, mortgage balance $280,000.
Result: Estimated home equity: $120,000. Loan-to-value ratio: 70%.
Frequently Asked Questions
Is home equity the same as cash I can borrow?
No. Equity is an ownership measure. A lender may allow only part of that equity to support a new loan.
What is LTV?
Loan-to-value is secured debt divided by the home value.
Can I use all of my home equity?
Usually not. A lender may limit borrowing based on loan-to-value, credit, income, property value, and other underwriting requirements. Equity and available borrowing capacity are different measures.
This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.