Home Equity Calculator

Last updated July 2, 2026

Home equity is the difference between what your home is worth and what you owe on it, and it's the foundation of most homeowners' net worth in the United States. For a home worth $500,000 with a $320,000 remaining mortgage balance, equity is $180,000 — or 36 percent of the home's value. Equity grows in two ways: through principal paydown as mortgage payments chip away at the loan balance, and through home price appreciation. In the early years of a mortgage, principal paydown is slow due to amortization — roughly 80 percent of payments go toward interest in the first year of a 30-year loan at 7 percent. Price appreciation, when present, can add equity far faster than principal paydown.

Home equity becomes accessible through a home equity line of credit (HELOC), a home equity loan, or a cash-out refinance — each with different structures, rate profiles, and use cases. HELOCs typically carry variable rates tied to the prime rate and function like a revolving credit line. Home equity loans provide a fixed lump sum at a fixed rate. Both require adequate equity — most lenders cap combined loan-to-value at 80 to 90 percent of the appraised value — and treat the home as collateral, meaning default can result in foreclosure. Using home equity to fund home improvements that increase value is generally considered sound; using it to fund lifestyle expenses or investments with uncertain returns carries significant risk.

Tracking your home equity annually as part of your net worth calculation, and understand the distinction between equity on paper and equity accessible through a loan. Lenders typically allow you to borrow against 80 to 90 percent of appraised value minus your mortgage balance. Know your number before you need it.