See how much equity you've built and how much a lender would let you borrow
| Product | Typical Max CLTV | What Lenders Check |
|---|---|---|
| HELOC | 80% – 90% | Credit score (often 680+), DTI under ~43% |
| Home equity loan | 80% – 85% | Credit score (often 660+), DTI, payment history |
| Conventional cash-out refinance | 80% | Credit score 620+, DTI, full underwriting |
| VA cash-out refinance | Up to 90% | COE, credit, residual income test |
| FHA cash-out refinance | 80% | Credit score 500+, 12 months on-time payments |
| After Year | Principal Paid Off (Equity from Payments) |
|---|---|
| 1 | ≈ $4,500 |
| 5 | ≈ $25,600 |
| 10 | ≈ $60,900 |
| 15 | ≈ $109,800 |
Payments alone build equity slowly in the early years because most of each payment goes to interest. Home-price appreciation usually adds far more; even 3% a year on a $500,000 home is $15,000 of new equity annually.
Home equity is the slice of your home you actually own: the market value minus everything you still owe on it. It's the number behind every HELOC offer, home equity loan quote, and cash-out refinance. This calculator shows your equity in dollars and percent, plus the figure lenders really care about, which is how much room you have under their loan-to-value limit.
Equity = home value − (mortgage balance + any second lien). Equity percentage = equity ÷ value. Your combined LTV (CLTV) is the mirror image: total debt ÷ value. The borrowing math is where the lender's cap comes in: available to borrow = (value × max LTV) − total debt. If that comes out negative, you're over the limit and can't borrow more against the house yet.
Enter your home's current value (a recent appraisal or a realistic market estimate), your mortgage balance from your latest statement, and any second lien such as an existing HELOC. Then pick the lender limit: 80% is the most common cap, while some HELOC lenders stretch to 85% or 90%. Flip between the three options to see how much the limit itself changes your borrowing power. If you're not sure of your home's value, check a couple of recent sales of similar homes nearby and use the conservative end of the range, since the lender's appraiser probably will too.
A $500,000 home with a $280,000 mortgage and no second lien has $220,000 in equity, which is 44% of the home's value, and a CLTV of 56%. At an 80% max LTV, the lender's ceiling is $400,000 of total debt, so you could borrow up to $120,000 more. At an 85% limit that rises to $145,000. Notice you can't touch the full $220,000; the lender always leaves an equity cushion in the deal.
Slowly at first. On a $400,000 loan at 6.5%, you pay off only about $4,500 of principal in year one, because early payments are mostly interest. The pace accelerates every year, and home-price appreciation stacks on top. Most owners build equity faster through rising values than through payments in the first decade.
Three main products: a HELOC (a credit line you draw as needed), a home equity loan (a lump sum at a fixed rate), and a cash-out refinance (a new, bigger first mortgage). Lenders cap total borrowing at 80% to 90% of your home's value, so you can never tap every dollar of equity.
Yes, directly. The lender lends against the appraised value, not your Zillow estimate or what the neighbor's house sold for. Every $10,000 the appraisal comes in low cuts your borrowing power by $8,000 at an 80% limit. If the number seems wrong, you can dispute it or try another lender.
A HELOC suits ongoing or uncertain costs, since you draw only what you need and pay interest on that. A home equity loan fits a one-time known expense with a fixed rate and payment. A cash-out refinance replaces your whole mortgage, which only makes sense if the new rate beats your current one.