Home Equity Calculator

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Reviewed by: Daniel Ortiz, Certified Financial Analyst (CFA)
Daniel is a licensed CFA specializing in leveraging real estate assets, debt reduction strategies, and calculating loan-to-value (LTV) ratios.

The **Home Equity Calculator** determines the current market value of your stake in a property. Equity (P) is simply the difference between the Home Value (F) and the outstanding Mortgage Balance (V). This tool allows you to enter the Home Equity (P) and any two other variables to solve for the missing one, or calculate the Equity (P) from the Home Value (F) and Mortgage Balance (V). Enter any three values to solve for the missing one.

*Results assume the Home Value (F) is accurate and do not include fees for HELOCs or refinancing.

Current Home Value ($) (F):

Current Mortgage Balance ($) (V):

Loan-to-Value Ratio (%) (Q):

Home Equity ($) (P):

Home Equity Formulas

The core relationship defining equity is simple subtraction. The Loan-to-Value (LTV) Ratio is essential for determining how much equity is leverageable (Q).

Solve for Home Equity ($) (P):

P = F – V

Solve for Current Home Value ($) (F):

F = P + V

Solve for Mortgage Balance ($) (V):

V = F – P

Solve for LTV Ratio (%) (Q):

Q = [ V / F ] × 100

Formula Source: Investopedia: Home Equity

Variables Explained

P (Home Equity): The value of the property that the homeowner owns outright, free of debt ($).
F (Current Home Value): The estimated current market value of the property ($).
V (Current Mortgage Balance): The remaining principal amount owed on all mortgages and loans against the property ($).
Q (Loan-to-Value Ratio): The ratio of the mortgage balance (V) to the home value (F), expressed as a percentage. Lower LTV means higher equity.

Related Calculators

Explore tools to manage and leverage your home’s value:

Home Value Calculator (Estimate market price)
Mortgage Refinance Calculator (Check savings potential)
HELOC Payment Calculator (Estimate Home Equity Line of Credit payments)
Debt Consolidation Calculator (Using equity to pay off debt)

What is Home Equity?

Home equity represents the portion of your home’s current market value that you truly own. It is a critical financial asset that grows over time as you pay down your mortgage principal and as the market value of your home appreciates. Equity is calculated by subtracting your total outstanding mortgage balance (V) from your home’s current market value (F).

Lenders use the Loan-to-Value (LTV) ratio (Q) to determine eligibility for refinancing or a Home Equity Line of Credit (HELOC). A high level of equity (and therefore a low LTV) is desirable because it reduces the lender’s risk and often qualifies the homeowner for better loan rates or access to their home’s built-up capital.

How to Calculate Home Value (Example)

Let’s find the **Current Home Value (F)** if the Home Equity (P) is \$100,000 and the Mortgage Balance (V) is \$250,000.

Determine Variables:
$P = \$100,000$. $V = \$250,000$. We solve for F.
Apply the Formula:
F = P + V = \$100,000 + \$250,000.
Final Result:
F = $\mathbf{\$350,000}$. The current estimated value of the home is \$350,000.

Frequently Asked Questions (FAQ)

How does equity grow?

Equity grows in two primary ways: 1) by reducing the mortgage balance through principal payments, and 2) through the appreciation of the home’s market value over time.

What is a good LTV Ratio?

Lenders generally prefer an LTV ratio below 80%. An LTV of 80% or less usually allows a borrower to avoid paying Private Mortgage Insurance (PMI) and secures better rates for HELOCs and refinances.

Can equity be negative?

Yes. If the outstanding Mortgage Balance (V) is greater than the Current Home Value (F), you have negative equity, commonly called being “underwater” on the mortgage.

How much equity can I borrow against?

Most lenders allow you to borrow enough to maintain a combined Loan-to-Value (CLTV) ratio of around 80% to 90% after the new loan is factored in.

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