Home Equity Calculator
Calculate your home equity by subtracting the remaining mortgage from your property's current market value. See your equity amount, equity percentage, and loan-to-value ratio.
What Is Home Equity?
Home equity is the portion of your property that you truly own. It equals your home's current market value minus any outstanding mortgage balance or liens. As you make mortgage payments and your home appreciates in value, your equity grows. Home equity is one of the largest sources of wealth for homeowners and can be accessed through home equity loans, HELOCs, or cash-out refinancing. Understanding your equity position helps you make informed decisions about refinancing, selling, or borrowing against your property.
Understanding Loan-to-Value Ratio
The loan-to-value ratio compares your remaining mortgage balance to your home's current value. An LTV of 80% or below means you have at least 20% equity and can typically avoid private mortgage insurance. Lower LTV ratios give you better refinancing options and interest rates. If your LTV exceeds 100%, you are underwater on your mortgage, meaning you owe more than the home is worth. Tracking your LTV over time helps you identify the right moment to refinance or remove PMI from your current loan.
How to Build Home Equity Faster
Make extra principal payments to pay down the mortgage faster. Choose a shorter loan term like 15 years instead of 30. Invest in home improvements that increase market value, such as kitchen renovations, bathroom upgrades, or energy-efficient upgrades. Avoid cash-out refinancing unless you have a specific investment purpose. Keep your property well-maintained to protect its market value. Market appreciation also builds equity passively over time, though you should not rely on it as your primary strategy. Review your equity annually to stay on top of your financial position.