Home Equity Calculator
Calculate how much equity you have in your home and compare HELOC vs home equity loan options to access your equity.
Your Home Details
Enter your home value and current mortgage balance
HELOCs, tax liens, etc.
Most lenders cap at 80-85% LTV
$400,000
$150,000
37.5% of home value
62.5%
Loan-to-Value Ratio
$70,000
At 80% LTV
Equity Breakdown
What is Home Equity?
Home equity is the difference between your home's current market value and the amount you still owe on your mortgage. It represents the portion of your home that you truly "own" - your stake in the property.
Home Equity Formula
Home Equity = Home Value - Mortgage Balance - Other LiensExample:
Home Value: $400,000
Mortgage Balance: $250,000
Home Equity: $400,000 - $250,000 = $150,000
HELOC vs Home Equity Loan
HELOC (Home Equity Line of Credit)
Works like a credit card secured by your home. You can borrow up to your credit limit, repay, and borrow again during the draw period.
- Rate: Variable (Prime + margin)
- Access: Revolving credit line
- Draw Period: Typically 5-10 years
- Repayment: Interest-only during draw, then P&I
- Best For: Ongoing expenses, emergencies, flexibility
Home Equity Loan (HEL)
A second mortgage with a fixed rate and term. You receive a lump sum and make fixed monthly payments until paid off.
- Rate: Fixed for entire term
- Access: Lump sum upfront
- Terms: Typically 5-30 years
- Repayment: Fixed P&I from day one
- Best For: Large one-time expenses, predictability
Understanding LTV (Loan-to-Value)
Loan-to-Value ratio is a critical factor in determining how much you can borrow. Lenders typically allow a combined LTV (CLTV) of 80-90% for home equity products.
LTV Formula
LTV = (Total Debt on Property ÷ Home Value) × 100Example at 80% Max LTV:
Home Value: $400,000
Max Total Debt: $400,000 × 80% = $320,000
Current Mortgage: $250,000
Max Borrowable: $320,000 - $250,000 = $70,000
Best rates, most common cap
Available with strong credit
Rare, very high rates
Common Uses for Home Equity
Home Improvements
Renovations, remodeling, repairs - may increase home value and could be tax-deductible.
Debt Consolidation
Pay off high-interest credit cards with a lower-rate home equity product.
Education Expenses
College tuition, often lower rates than student loans.
Emergency Fund
HELOC as backup for unexpected expenses (only pay when used).
Major Purchases
Vehicle, wedding, medical expenses - lower than personal loan rates.
Investment Property
Down payment on rental property or investment opportunity.
Risks to Consider
Your Home is Collateral
Unlike credit cards or personal loans, home equity products use your home as security. If you can't make payments, you could lose your home to foreclosure.
Market Risk
If home values drop, you could end up "underwater" - owing more than your home is worth. This can trap you in the property.
HELOC Rate Risk
HELOC rates are variable. If rates rise significantly, your payments could become unaffordable.
Payment Shock
When a HELOC's draw period ends, payments jump from interest-only to full principal and interest - sometimes doubling or more.
Frequently Asked Questions
How much equity do I need to qualify?
Most lenders require at least 15-20% equity in your home. With an 80% max LTV, you'd need 20% equity to qualify for any borrowing capacity.
Is interest on home equity tax-deductible?
Interest may be deductible if the funds are used for "substantial home improvements" to the home securing the loan. Consult a tax professional for your specific situation.
What credit score do I need?
Most lenders require a minimum credit score of 620-680 for home equity products. Better scores (700+) qualify for the best rates and terms.
How long does it take to get a HELOC or HEL?
Typically 2-6 weeks, including application, appraisal, underwriting, and closing. Some lenders offer expedited processes in 2-3 weeks.
Can I have both a HELOC and home equity loan?
Yes, as long as your combined LTV stays within lender limits (usually 80-90%). However, having multiple liens increases complexity and risk.