Home Equity Calculator

Home equity = Current home value - All mortgage balances. If your home is worth $450,000 and you owe $280,000, you have $170,000 in equity. Equity grows as you pay down the mortgage and as home values appreciate. It is your ownership stake in the property.

A HELOC (Home Equity Line of Credit) is a revolving credit line secured by your home, similar to a credit card. You draw from it during the draw period (5-10 years), then repay during the repayment period (10-20 years). Interest is variable. Rates are typically much lower than personal loans or credit cards.

Most lenders allow combined LTV (your mortgage + HELOC) up to 80-85% of home value. If your home is worth $450k and you owe $280k, and the lender allows 80% CLTV: $450k x 80% = $360k max combined. $360k - $280k mortgage = $80k available HELOC.

HELOC: variable rate, flexible draw (use only what you need), better for ongoing projects. Home equity loan: fixed rate, lump sum, predictable payments, better for one-time expenses. HELOC is more common. Both use your home as collateral — default risks foreclosure.

Home improvements (often tax-deductible interest), debt consolidation (caution: converts unsecured to secured debt), college, emergencies. Not recommended: vacations, luxury purchases, investing in stocks (double risk — if market drops, home could be at risk too). Use equity loans for value-adding purposes only.