Home Equity and HELOC Calculator
This calculator helps you determine how much equity you have built in your home and how much you could borrow through a HELOC (home equity line of credit) or home equity loan. Enter your current home value and outstanding mortgage balance to see your equity amount and percentage. The calculator shows your loan-to-value ratio and estimates your maximum borrowable amount based on typical lender limits. If you're considering a HELOC, you can also project your monthly interest payments during the draw period based on the amount you plan to draw and the current interest rate. Understand the difference between HELOCs (flexible credit lines with variable rates) and home equity loans (fixed-rate lump sums), and see which borrowing option aligns with your financial needs and timeline.
With a $400,000 home and a $250,000 mortgage balance, you have -- in equity (--). At 80% max LTV, you could borrow up to -- via a HELOC or home equity loan.
How home equity is calculated
Home equity is straightforward arithmetic: your current market value minus the outstanding balance on any mortgages secured against the property. The calculation is simple, but the market value input is an estimate. Lenders will order a formal appraisal before approving a HELOC or home equity loan, and that appraised value may differ from your own estimate or an automated valuation model (AVM).
Home equity = current market value - outstanding mortgage balance
LTV = outstanding balance / current market value x 100
Equity % = home equity / current market value x 100
How lenders use LTV to set HELOC credit limits
Lenders do not lend against 100% of your equity. Instead, they set a maximum combined loan-to-value (CLTV) ratio, which covers your existing mortgage plus any new HELOC. A lender with an 80% CLTV limit will not allow the total of your mortgage balance and HELOC together to exceed 80% of the appraised value.
Maximum borrowable = max(0, home value x max LTV / 100 - mortgage balance)
Monthly interest-only payment = draw amount x annual rate / 100 / 12
Worked example
$400,000 home, $250,000 mortgage balance, 80% max LTV, 8.5% HELOC rate, $50,000 planned draw:
- Home equity = $400,000 - $250,000 = $150,000
- LTV = $250,000 / $400,000 = 62.5%
- Equity % = $150,000 / $400,000 = 37.5%
- Max borrowable = $400,000 x 80% - $250,000 = $320,000 - $250,000 = $70,000
- Monthly interest on $50,000 draw = $50,000 x 8.5% / 12 = $354.17
Home equity loans vs. HELOCs
Both products let you borrow against your equity, but they work differently. A home equity loan gives you a lump sum at a fixed rate, repaid in equal monthly installments over a set term, much like a second mortgage. A HELOC is a revolving line of credit with a variable rate. During the draw period (typically 10 years) you can borrow and repay repeatedly; during the repayment period (typically 10-20 years) the balance is paid down.
The CFPB provides detailed guidance on both products at consumerfinance.gov. Key considerations include the variable-rate risk on a HELOC, closing costs on a home equity loan, and the fact that both products are secured by your home: defaulting puts your property at risk.
Equity-building over time
Two forces build equity: loan pay-down and appreciation. Early in a 30-year mortgage, most of each payment covers interest and only a small portion reduces the principal balance. Equity from pay-down therefore accumulates slowly at first and accelerates later. Home price appreciation (or depreciation) affects equity independently of your payments. Use the amortization calculator to see how your balance falls over time.
Home equity calculator: frequently asked questions
What is home equity?
Home equity is the portion of your home's value you own outright. It equals your current market value minus your outstanding mortgage balance. Equity builds in two ways: as you make mortgage payments that reduce the balance, and as your home appreciates in value.
What is a HELOC?
A home equity line of credit (HELOC) lets you borrow against your equity up to an approved credit limit, similar to a credit card. Interest is charged only on the amount you draw, not the full limit. The CFPB explains HELOCs in detail at consumerfinance.gov.
What LTV do lenders require for a HELOC?
Most lenders limit the combined loan-to-value ratio (your first mortgage plus the HELOC) to 80-85% of the home's appraised value. Some lenders go up to 90%. The 80% figure used here is a common conservative benchmark; your individual lender sets the actual limit based on your credit profile, income and property.
Is home equity loan interest tax-deductible?
Under current law (Tax Cuts and Jobs Act of 2017), interest on a home equity loan or HELOC may be deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on funds used for other purposes (debt consolidation, living expenses) is generally not deductible. Consult a tax professional for your situation. The IRS covers this in Publication 936 at irs.gov.
Official sources
- CFPB, Home equity loans and HELOCs: consumerfinance.gov.
- IRS Publication 936, Home Mortgage Interest Deduction: irs.gov/publications/p936.
Reviewed by the CalculatorHub team, edited by James Graham, 12 June 2026. See our methodology. General information, not financial advice.