Calculate your home equity, available HELOC borrowing power, combined loan-to-value ratio (CLTV), and cash-out refinance potential based on your home's current value and existing mortgage balance.
Total Home Equity
$0
Equity Percentage0%
Available HELOC Borrowing Power (80% CLTV)$0
Combined Loan-to-Value (CLTV)0%
Cash-Out Refinance Potential (80% LTV)$0
Total Appreciation$0
About Home Equity Calculator
Home equity is the difference between your home's current market value and the total amount you owe on all mortgages and liens secured by the property. It represents the portion of your home that you truly own. This calculator helps you understand your current equity position, how much you could borrow through a HELOC or home equity loan, and what a cash-out refinance might look like. Home equity is often a household's largest asset and can be leveraged for home improvements, debt consolidation, education expenses, or emergency funding — but it also puts your home at risk if you cannot repay.
How to Use This Calculator
Enter your home's current market value — use a recent appraisal, Zillow Zestimate, or comparable sales in your neighborhood. Input your original purchase price to see total appreciation. Enter the remaining balance on your primary mortgage (check your latest statement or online account). Add any HELOC or second mortgage balance. Include other liens like tax liens or judgments if applicable. The calculator will show your total equity, equity percentage, available HELOC borrowing power based on the standard 80% combined loan-to-value (CLTV) limit, your current CLTV ratio, and cash-out refinance potential at 80% loan-to-value (LTV). Most lenders require at least 20% equity remaining after the new loan.
When to Use This Calculator
Use this calculator when considering a HELOC for home renovations — the interest may be tax-deductible if used for substantial home improvements. Use it before applying for a cash-out refinance to understand how much you could withdraw while keeping at least 20% equity. Use it when evaluating whether to sell or refinance — if your equity percentage is low, you may owe money at closing after agent fees. Use it annually to track your wealth building as you pay down your mortgage and (hopefully) your home appreciates. Use it when considering debt consolidation — home equity loans often have lower rates than credit cards or personal loans, but they secure the debt against your home.
How to Interpret Your Results
With a $450,000 home value and $280,000 mortgage balance, your equity is $170,000 (37.8%). At the standard 80% CLTV limit, you could borrow up to $80,000 through a HELOC ($450,000 × 0.80 = $360,000 maximum debt − $280,000 current mortgage = $80,000 available). Your current CLTV is 62.2% ($280,000 ÷ $450,000). A cash-out refinance at 80% LTV would allow a new loan of $360,000, leaving $80,000 cash-out after paying off the $280,000 mortgage. Total appreciation since purchase is $100,000 ($450,000 − $350,000). Remember that HELOC rates are variable and tied to prime rate, while cash-out refinance rates are typically fixed but higher than rate-and-term refinances.
Home equity is the difference between your home's current market value and the total amount you owe on all mortgages and liens secured by the property. The formula is: Home Value − Total Mortgage Debt − Other Liens = Home Equity. For example, if your home is worth $450,000 and you owe $280,000 on your mortgage with a $20,000 HELOC balance, your equity is $150,000 ($450,000 − $280,000 − $20,000). Equity percentage is calculated as (Equity ÷ Home Value) × 100, so in this case 33.3%.
How much can I borrow with a HELOC?
Most lenders allow a combined loan-to-value (CLTV) ratio of up to 80-85% for HELOCs. The formula is: (Home Value × Max CLTV) − Current Mortgage Balance = Maximum HELOC Amount. With a $450,000 home and $280,000 mortgage at 80% CLTV: ($450,000 × 0.80) − $280,000 = $360,000 − $280,000 = $80,000 available. Some lenders go to 90% CLTV for well-qualified borrowers, which would allow $125,000. HELOC rates are variable and typically prime rate plus a margin (currently around 8.5-11% APR).
What is the difference between a HELOC and a cash-out refinance?
A HELOC is a second mortgage that gives you a revolving line of credit you can draw from as needed during a draw period (typically 10 years), followed by a repayment period. Rates are variable. A cash-out refinance replaces your existing mortgage with a new, larger loan, giving you the difference in cash at closing. Rates are typically fixed but higher than rate-and-term refinances. HELOCs offer flexibility — you only pay interest on what you draw. Cash-out refinances give you a lump sum and simplify to one payment. Choose HELOC for ongoing projects; choose cash-out refi for large one-time expenses or debt consolidation.
Is home equity loan interest tax deductible?
Under the Tax Cuts and Jobs Act of 2017, home equity loan or HELOC interest is only tax-deductible if the funds are used to "buy, build, or substantially improve" the home that secures the loan. This applies through 2025. Using a HELOC for debt consolidation, education, or other expenses does not qualify for the deduction. The deduction is also limited to interest on up to $750,000 of total mortgage debt ($1 million for loans before December 15, 2017). Consult a tax advisor for your specific situation as tax laws can change and state rules may differ.
What happens to my equity if home values decline?
If home values drop, your equity decreases dollar-for-dollar with the decline. If your $450,000 home drops 10% to $405,000, your equity falls from $170,000 to $125,000 (a 26% decline). This is why lenders maintain CLTV limits — they provide a cushion against declines. If you have a HELOC and values drop significantly, the lender may freeze or reduce your credit line. In extreme cases where you owe more than the home is worth (negative equity or "underwater"), you cannot sell without bringing cash to closing or doing a short sale. This is why maintaining at least 20% equity is crucial for financial flexibility.
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