What Is a Home Equity Calculator?
A home equity calculator is a financial tool that shows you the potential borrowing power stored in your home. By subtracting your mortgage balance from your home's current market value, it reveals your total equity. More importantly, it estimates your 'tappable' equity—the amount a lender might actually let you borrow through a home equity loan or HELOC.
How to Use This Calculator
- Enter your home's current estimated market value.
- Input the remaining balance on your mortgage.
- Select a Loan-to-Value (LTV) ratio, typically 80% or 85%.
- Click "Calculate" to see your total and tappable equity.
Understanding Your Home Equity Results
- Total Home Equity: This is the straightforward calculation of your home's value minus what you owe. It represents your ownership stake in the property.
- Estimated Tappable Equity: This is the crucial number. It shows the approximate amount a lender might let you borrow. This is not your total equity, as lenders require you to keep a certain amount of equity (usually 15-20%) in your home as a safety buffer.
This is an Estimate
The actual amount you can borrow depends on your credit score, income, and the specific lender's policies. Always consult with a financial advisor or lender to understand your specific options.