Home finance
Home Equity Calculator
This home equity calculator separates the equity you own from the amount that may remain below an editable combined loan-to-value ceiling. Home equity is current market value minus every debt secured by the property; estimated additional borrowing room is the selected maximum CLTV times value, minus those secured balances, floored at zero. The result is a private, in-browser estimate—not a lender approval or an appraisal.
Compare 80%, 85% or a custom assumption. Bank of America currently publishes up to 85% for certain qualifying primary-residence HELOCs, with lower caps in some circumstances; that lender example is not a universal standard.
Your estimate
Equity and estimated borrowing room
- Current home equity40% of current value
- $200,000
- Total secured debtFirst mortgage plus other secured balances
- $300,000
- First-lien LTVFirst mortgage divided by current value
- 60%
- Combined LTV (CLTV)Every entered secured balance divided by value
- 60%
- Equity retained at modeled maximum15% of value after using the full estimate
- $75,000
Mathematical ceiling only. Appraisal, lien position, property type, state law, credit, income, debt-to-income ratio, fees and product limits can reduce or eliminate availability.
Property value allocation
The bar divides entered value into current secured debt, modeled additional room and retained equity. The text legend supplies every value; color is not the only cue.
- Secured debt
- $300,000 · 60%
- Additional room
- $125,000 · 25%
- Retained equity
- $75,000 · 15%
Calculation trace
($500,000 × 85%) − $300,000 = $125,000
The result is floored at $0; negative equity itself remains visible rather than being hidden.
Method
How the Home Equity Calculator Works
Four linked calculations
- 1. Equity: current value minus the first mortgage and every other secured balance.
- 2. First-lien LTV: first mortgage divided by current value, multiplied by 100.
- 3. CLTV: all entered secured debt divided by current value, multiplied by 100.
- 4. Borrowing room: max(0, value × selected cap − secured debt).
Worked $500,000 example
A home estimated at $500,000 with a $300,000 first mortgage has $200,000 equity. Both first-lien LTV and CLTV are 60% when there is no junior lien. At an illustrative 85%ceiling, total modeled secured borrowing is $425,000. Subtracting the existing $300,000 leaves $125,000 of estimated room and preserves $75,000, or 15%, as the modeled cushion.
The method follows the CFPB explanation that lenders may set a line by taking a percentage of appraised value and subtracting the existing mortgage. This implementation expands the debt side to include every secured balance the user enters, so it can show first-lien LTV separately from all-liens CLTV. It keeps full numerical precision until display and never converts a negative ceiling into a negative credit line.
Concrete scenarios
Home equity examples across common situations
Established owner at an 85% ceiling
$500,000 value · $300,000 mortgage · no other liens · 85% cap
$200,000 equity · 60% CLTV · $125,000 estimated room · $75,000 retained
Total equity and borrowable equity are not equal: the selected 15% cushion keeps $75,000 outside the modeled borrowing ceiling.
Existing second lien included
$380,000 value · $240,000 mortgage · $20,000 other lien · 85% cap
$120,000 equity · 68.42% CLTV · $63,000 estimated room
The second lien consumes part of the CLTV capacity even though it has a separate payment and may carry a different rate.
Conservative 80% comparison
$600,000 value · $360,000 mortgage · $30,000 second mortgage · 80% cap
$210,000 equity · 65% CLTV · $90,000 estimated room · $120,000 retained
A lower selected cap deliberately preserves more of the property value and reduces the modeled additional borrowing ceiling.
Underwater property
$400,000 value · $420,000 mortgage · no other liens · 85% cap
−$20,000 equity · 105% CLTV · $0 estimated room
Negative equity remains visible instead of being converted into a positive result; only additional borrowing room is floored at zero.
Mortgage-free home
$300,000 value · no secured debt · 80% cap
$300,000 equity · 0% CLTV · $240,000 modeled ceiling · $60,000 retained
Even with no mortgage, the selected CLTV assumption keeps a cushion and actual underwriting can offer less or decline the application.
United States context
Lender limits, prime rates and tax rules
A maximum CLTV is a lender and product rule, not a federal entitlement. Bank of America currently says it may lend up to 85% of total equity for qualifying primary-residence lines up to $500,000, while its Texas primary-residence and specified second-home examples use 80%. Larger lines can face lower caps. That evidence makes 80% and 85% useful comparison inputs, but it does not make either one typical for every lender, property or state.
The Federal Reserve’s H.15 release dated August 24, 2026 reported a 6.75%bank prime loan rate for August 21. Prime is one benchmark banks may use when pricing variable credit; it is not a HELOC APR offer and it does not change the amount of equity in a home. A quoted HELOC rate may add a margin, change over time and carry floors, caps or promotional terms.
Tax treatment depends on use, not simply on the label “home equity.” IRS Publication 936 says interest is not deductible when proceeds are not used to buy, build or substantially improve the qualified home securing the debt. Itemization, secured-debt, qualified-home and debt-limit rules also matter. No output on this page is a tax deduction estimate.
The collateral risk is more important than the arithmetic. CFPB guidance describes a HELOC as reusable open-end credit that usually has a variable rate and a home equity loan as a usually fixed-rate lump sum. Both place the home behind the debt; missed repayment can lead to foreclosure. Borrowing room should therefore be paired with an affordable payment plan and a review of fees, draw conditions and repayment terms.
Avoidable errors
Common home equity mistakes and edge cases
- Leaving junior liens out of CLTV. Add the outstanding balance of every second mortgage and HELOC. First-lien LTV alone can materially overstate room.
- Using the purchase price forever. Equity uses current value. A lender appraisal can differ from a tax assessment, online estimate or owner opinion.
- Calling 85% a universal maximum. Limits vary by lender, state, property type, lien position and line size. Keep the assumption editable.
- Hiding negative equity. When debt exceeds value, equity must remain negative and CLTV can exceed 100%; only additional room is floored at zero.
- Treating room as approval. Credit, income, DTI, appraisal, title, occupancy, insurance, fees and product limits can reduce or eliminate the mathematical ceiling.
- Ignoring an unused HELOC commitment. This estimate uses outstanding debt, but a lender may evaluate the full committed line under its policy. Check the underwriting definition.
- Rounding at the cap. Calculations retain full precision and money rounds only for display, preventing a tiny negative room from appearing as a positive dollar.
- Assuming interest is automatically deductible. IRS use-of-proceeds and other rules require separate analysis; borrowing against a home does not itself create a deduction.
Decision framework
Related home financing concepts
LTV versus CLTV
LTV usually isolates the first mortgage. CLTV adds other liens, making it the more revealing measure when an owner already has a second mortgage or HELOC.
HELOC versus home equity loan
A HELOC generally allows repeated draws and usually varies in rate. A home equity loan generally advances one lump sum at a fixed rate. Both are secured by the home.
Cash-out refinance
Cash-out refinancing replaces the first mortgage rather than adding a separate lien. Compare the new rate on the entire balance, closing costs and term reset—not just cash received.
Mortgage amortization
Principal payments can build equity even when value is unchanged. Use the existing loan calculator to inspect how a fixed balance amortizes, while recognizing that HELOC repayment rules may differ.
Cap comparison
How the maximum CLTV assumption changes room
| Scenario | Maximum secured debt | Additional room | Value cushion |
|---|---|---|---|
| 80% comparison (80%) | $400,000 | $100,000 | $100,000 |
| 85% comparison (85%) | $425,000 | $125,000 | $75,000 |
| Selected custom cap (85%) | $425,000 | $125,000 | $75,000 |
Questions homeowners ask
Home equity calculator FAQ
How do I calculate home equity?
Subtract every current debt secured by the property from its current market value. For a $500,000 home with a $300,000 first mortgage and no other lien, equity is $200,000, or 40% of value. Use a current estimate rather than the old purchase price because value and principal balances both change.
What is the difference between home equity and tappable equity?
Home equity is value minus secured debt. Tappable equity is the smaller amount left after preserving a lender-required cushion. This calculator models it as the selected maximum CLTV times value, minus all current secured balances, floored at zero. The result is a mathematical ceiling, not an approval or guaranteed credit limit.
What is the difference between LTV and CLTV?
First-lien LTV divides only the first mortgage balance by home value. Combined LTV divides all secured balances—including a second mortgage or outstanding HELOC—by value. On a $380,000 home with a $240,000 mortgage and $20,000 HELOC balance, first-lien LTV is 63.16% but CLTV is 68.42%.
Can I borrow 100% of my home equity?
Mainstream products commonly preserve an equity cushion and add credit, income, debt-to-income, property and product tests. Bank of America currently publishes an example ceiling up to 85% for certain qualifying primary residences, with 80% and lower-limit exceptions. That is one lender policy, not a universal market maximum.
Does an existing HELOC count against available equity?
Its outstanding balance belongs in total secured debt and therefore in CLTV. Enter that balance with other liens. A lender may also consider an undrawn committed limit or use a product-specific definition, so its underwriting CLTV can differ from this balance-based estimate.
Why can a lender's appraisal change my result?
Home value is the denominator in every ratio and the base for the maximum-dollar calculation. A lower appraisal reduces equity and borrowing room while raising LTV and CLTV. A tax assessment, automated estimate or recent sale price may be useful context, but it is not guaranteed to match the valuation used in underwriting.
What happens if my home value drops after I open a HELOC?
The CFPB explains that a lender may reduce or freeze additional HELOC access when property value falls significantly or when financial circumstances materially change. An approved credit limit is therefore not a promise that every undrawn dollar will remain available throughout the draw period.
Is a HELOC rate fixed or variable?
CFPB guidance says HELOCs usually carry variable rates, so payments can change; some plans permit a fixed-rate conversion for part of the balance. A home equity loan is generally a lump sum with a fixed rate. This equity calculator intentionally does not estimate either payment because payment requires rate, term, fees and repayment rules.
Is home equity loan or HELOC interest tax-deductible?
IRS Publication 936 says home-equity interest is not deductible when proceeds are not used to buy, build or substantially improve the qualified home securing the debt. Itemization, qualified-home and debt-limit rules also apply. This calculator does not decide deductibility; use current IRS guidance or qualified tax advice.
Why is borrowing room zero when I still have equity?
Total equity can remain while secured debt is already at the selected CLTV ceiling. A $500,000 property with $400,000 of secured debt has $100,000 of equity, but at an 80% cap the modeled ceiling is also $400,000, leaving no additional room under that scenario.
Authoritative sources
- Consumer Financial Protection Bureau — What is a HELOC?
Defines available home equity, open-end borrowing, variable-rate behavior and the risk of losing the home after nonpayment.
- Consumer Financial Protection Bureau — HELOC consumer booklet
Explains the percentage-of-appraised-value-minus-existing-mortgage method and lender-specific credit limits, fees and plan terms.
- Consumer Financial Protection Bureau — What is a home equity loan?
Describes the usually fixed-rate lump-sum product and explains that the property secures repayment.
- Internal Revenue Service — Publication 936 (2025)
Sets the use-of-proceeds, secured-debt, qualified-home, itemization and debt-limit conditions for mortgage-interest deductions.
- Federal Reserve Board — H.15 Selected Interest Rates
Reported a 6.75% bank prime loan rate for August 21, 2026; prime is context, not a quoted HELOC APR.
- Bank of America — HELOC calculator and product limits
Provides the cited lender-specific 85% example and 80% Texas and second-home exceptions, with lower caps possible for larger lines.
Informational estimate only. This calculator does not value property, approve credit, quote a rate, estimate a payment, determine tax deductibility or provide financial, legal or tax advice. A lender can use a different appraisal, balances, CLTV definition and product ceiling. Borrowing against a home creates foreclosure risk if the debt cannot be repaid.
Published by Kalcify · Last updated
Calculators are built against primary sources — government tax authorities (IRS, HMRC, CRA, ATO) for finance and the World Health Organization for health metrics. Updated when rates or rules change. View methodology and data sources.
Published by Kalcify · Last updated
Calculators are built against primary sources — government tax authorities (IRS, HMRC, CRA, ATO) for finance and the World Health Organization for health metrics. Updated when rates or rules change. View methodology and data sources.
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