How do I calculate the equity in my home?

Your home equity is your home's current market value minus everything you still owe against it. Take what the home would sell for today, subtract your mortgage balance and any second loan or line of credit, and the number left over is your equity.

That is the whole formula. The work is in getting each piece right, and in understanding why the equity you can actually borrow is smaller than the equity you own on paper.

What is the formula for home equity?

Home equity equals current market value minus total loans secured by the home. If your house would sell for $600,000 today and you owe $350,000 on your mortgage, you have $250,000 in equity. If you also carry a $20,000 home equity line, your equity drops to $230,000, because that line is secured by the same house.

What counts as my home's value?

Value here means what a buyer would pay today, not what you paid at purchase and not your county tax assessment. The tax assessed value is often years behind the market and should not be used for this math. For a rough estimate you can look at recent sales of similar homes nearby. For a number a lender will actually use, you need an appraisal or a lender's automated valuation.

What do I subtract?

Subtract every loan tied to the property. That means your first mortgage balance, plus any second mortgage, home equity loan, or home equity line of credit balance. Unsecured debts like credit cards and car loans do not count, because they are not attached to the house.

Here is the math on a real example

Home equity worked example. Verified as of July 13, 2026. Home value today: $600,000 First mortgage balance: $350,000 Home equity you own: $250,000 Usable at 80% combined loan-to-value: $600,000 x 0.80 = $480,000, minus the $350,000 you owe, leaves $130,000 you could borrow.

How much of my equity can I actually use?

Lenders do not let you borrow every dollar of equity. They cap your total borrowing at a percentage of the home's value, called the combined loan-to-value ratio, or CLTV. Many lenders stop around 80 to 85 percent of value. Some will let you borrow more, and a broker with access to many wholesale lenders can sometimes place a borrower at 90 percent or higher when the file supports it. As Emmett Clark, I am licensed in 18 states and work with more than 240 wholesale lenders, so the right CLTV cap often depends on which lender the file is matched to.

Why is my usable equity smaller than my total equity?

Because the lender keeps a cushion. That cushion protects them if home values dip and they ever need to sell the property to recover the loan. In the example above you own $250,000 in equity but can tap $130,000, since the 80 percent CLTV cap leaves the rest untouched.

How often does my equity change?

Constantly. It rises as you pay down principal each month and as your home appreciates, and it falls if local values drop. This is why a lender pulls a fresh valuation when you apply, rather than trusting a number from a year ago.

Once you know your equity, the next question is usually how to borrow against it. Start with the difference between the two main tools in HELOC versus home equity loan, and you can run your own scenarios on the mortgage calculators.