How to Calculate Your Home Equity
Published Apr 13, 2026 · 6 min read
Home equity is the difference between your home's market value and what you owe on it. It's your ownership stake β and it can be a powerful financial tool.
The Formula
Home Equity = Current Market Value β Remaining Mortgage Balance
Example: Home worth $400,000 with $250,000 remaining on mortgage = $150,000 in equity (37.5% equity, 62.5% LTV).
How Equity Grows
- Mortgage payments β Each payment reduces your principal
- Home appreciation β Average 3-5% per year nationally
- Home improvements β Certain renovations add value (kitchen, bathrooms)
Accessing Your Equity
| Option | Rate Type | Best For |
|---|---|---|
| HELOC | Variable | Ongoing expenses, flexibility |
| Home Equity Loan | Fixed | One-time large expense |
| Cash-out Refinance | Fixed | Lower rate + cash out |
Try it: Use our Home Equity Calculator to find your equity, LTV ratio, and maximum HELOC amount.