How to calculate home equity

One subtraction gives you total equity. A second step tells you how much of it a lender will actually let you borrow.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

The basic formula

Home equity is the part of your home's value that no lender has a claim on.

Home equity = current market value − total of all liens on the home

"All liens" means every debt recorded against the property, not just your first mortgage:

• Your first mortgage's current principal balance (from your latest statement, not the original loan amount)
• Any home equity loan or existing HELOC
• Recorded liens such as a solar or PACE lien, a tax lien, or a judgment lien

To express equity as a percentage, divide equity by value. $200,000 ÷ $500,000 = 40% equity.

How to estimate your home's value

The liens are easy to look up. The value is the number people get wrong, so treat any estimate as a range until a lender confirms it.

• Recent comparable sales. The best do-it-yourself estimate. Look for sales in the last three to six months of similar homes close to yours: same neighborhood, similar size, bedrooms, age and condition. Price per square foot from three or four good comps, times your square footage, gets you in the right area.
• Online estimates. Useful as a rough starting point, but they can miss renovations, condition and lot differences, and different sites often disagree by tens of thousands of dollars. Don't plan a project around one.
• A real estate agent's opinion. A broker price opinion or market analysis is usually closer than an online number.
• The lender's valuation decides. For a HELOC, the lender sets the value it lends against, using a full appraisal, a drive-by, or an automated valuation depending on the loan. See does a HELOC require an appraisal.

If you're unsure, run the math with a conservative value, 5% to 10% below your best guess, so a lower appraisal doesn't surprise you.

Total equity vs. usable equity

Lenders won't lend against 100% of your value. They cap your combined loan-to-value ratio (CLTV): all loans on the home, including the full new HELOC limit, divided by value. Typical HELOC caps run 80%–85%, and some programs go to 85%.

Usable equity (maximum new line) = value × CLTV cap − all existing liens

That's the number that matters when you're deciding whether a HELOC can fund a project. The equity left above the cap stays in the home as a cushion against price drops.

Worked example: one mortgage

Example only. Home value $500,000, first mortgage balance $300,000, assuming an 85% CLTV cap.

• Total equity: $500,000 − $300,000 = $200,000 (40%)
• Maximum total borrowing at 85%: $500,000 × 0.85 = $425,000
• Usable equity: $425,000 − $300,000 = $125,000
• At an 80% cap instead: $400,000 − $300,000 = $100,000

So this owner has $200,000 in equity on paper, but a lender would approve a line of roughly $100,000 to $125,000, subject to credit, income and the appraised value.

Worked example: more than one lien

Example only. Home value $450,000, first mortgage $250,000, a home equity loan with $30,000 left, and a $15,000 solar lien recorded on the property. Assume an 85% CLTV cap.

• All liens: $250,000 + $30,000 + $15,000 = $295,000
• Total equity: $450,000 − $295,000 = $155,000 (about 34%)
• Maximum total borrowing: $450,000 × 0.85 = $382,500
• Usable equity if all liens stay: $382,500 − $295,000 = $87,500
• If the new line pays off the $30,000 home equity loan at closing, that loan drops out of the existing liens, but the payoff comes out of the new line. The line can be up to $382,500 − $265,000 = $117,500, leaving $87,500 to use after the payoff.

One more wrinkle: if you already have an open HELOC, many lenders count its full credit limit, not just the balance, because you could draw it. A $50,000 line with a $10,000 balance can count as $50,000 in liens. Closing or reducing that line can raise your usable equity.

The how much can I borrow calculator runs this math for you at different caps.

Is your equity enough for a HELOC?

Only if your equity exceeds roughly 15% to 20% of the home's value, because of the lender's CLTV cap, and more for a useful line. How much equity you need for a HELOC walks through 15%, 20% and 30% equity. Lenders also check credit, income and debt-to-income. Your home secures any HELOC, and nothing here is an offer to lend. To see your own numbers, get your HELOC rate from Shawn.

Questions people ask

How do I calculate my home equity percentage?

To find your home equity percentage, subtract all loans secured by the home from its value, then divide by the value. A $400,000 home with $260,000 owed has $140,000 in equity, which is 35%.

Do you use the original loan amount or current balance to calculate home equity?

Use the current principal balance from your latest mortgage statement. Every payment you make reduces the balance and adds to your equity.

Does a HELOC with a zero balance count against my equity?

Yes, for a new loan: many lenders count the full limit of an open HELOC as if it were drawn, even with a zero balance, which lowers the equity available to borrow. For your own net worth, an unused line doesn't count.

Is Zillow's estimate accurate enough to calculate my equity?

Not on its own. Zillow's estimate and other online estimates are a rough starting point that can be off by a wide margin, and the lender's appraisal or valuation sets the number used for a HELOC.

How much of my home equity can I borrow?

Lenders usually let you borrow up to 80%–85% of your home's value minus everything you owe on the home. On a $500,000 home with $300,000 owed, that's about $100,000 to $125,000 of usable equity.

More in HELOC guides

• What is a HELOC?
• HELOC requirements
• When the draw period ends
• How HELOC interest is calculated
• HELOC pros and cons
• Is a HELOC a bad idea?
• How to get a HELOC
• Does a HELOC show on your credit report?

All HELOC guides →