Calculate Your Home Equity
Understanding Your Home Equity Position
Home equity is the portion of your home's value that you own outright — your home's current market value minus any outstanding mortgage balance. As of 2024, the average US homeowner with a mortgage has approximately $299,000 in home equity, according to CoreLogic — a record high driven by years of appreciation. Understanding your equity position is the foundation for any HELOC or home equity loan decision.
How Equity Builds Over Time
Equity grows through two channels: principal paydown (every mortgage payment that reduces your balance) and appreciation (rising home values in your area). Early mortgage payments are mostly interest — on a 30-year $300,000 mortgage at 7%, your first payment of about $1,996 applies only $746 to principal. Appreciation, especially in the 2020–2023 period, has been a far faster equity builder for most homeowners than their mortgage amortization schedule.
When You Have Enough Equity for a HELOC
Most lenders require your combined LTV to remain at or below 80–85% after the HELOC is established. If your current LTV is already above 80%, you likely don't qualify for a HELOC yet — though some credit unions and specialty lenders go up to 90% CLTV. Once you've confirmed your equity position here, use our HELOC calculator to see exactly how much you can borrow and what your payments would look like. If you're on the fence between a HELOC and a home equity loan, our comparison guide breaks down which product suits different needs.
Frequently Asked Questions
How is home equity calculated?
Home equity = Current Market Value − Outstanding Mortgage Balance. If your home is appraised at $450,000 and you owe $275,000, your equity is $175,000. As a percentage: $175,000 ÷ $450,000 = 38.9% equity (or 61.1% LTV). Lenders use an official appraisal — not Zillow estimates — to determine your home's value for HELOC or home equity loan applications. Automated valuation models (AVMs) like Zillow can be off by 5–10% in either direction, so treat online estimates as ballpark figures only.
Can I access my home equity without refinancing?
Yes — a HELOC and a home equity loan both let you access equity without touching your first mortgage. This is the key advantage over cash-out refinancing, which replaces your entire mortgage at today's rates. For homeowners who locked in sub-5% rates before 2022, preserving that rate while tapping equity via a second lien product can save tens of thousands in interest. Use our HELOC payment calculator to see what accessing your equity would cost monthly without refinancing.
Does home equity affect my credit score?
Equity itself doesn't appear on your credit report and doesn't directly affect your credit score. However, applying for a HELOC creates a hard inquiry, which temporarily reduces your score by a few points. If you open and use a HELOC, the credit utilization on that revolving account can affect your score — keeping your HELOC balance below 30% of the limit is generally advisable. Paying on time builds positive payment history, which is the largest factor (35%) in your FICO score. A well-managed HELOC can actually improve your credit profile over time.
What is a good equity percentage for a HELOC?
Entering a HELOC with at least 30–40% equity (60–70% LTV) gives you meaningful borrowing capacity while maintaining a comfortable safety margin. Borrowers at 70% LTV or below typically qualify for the best rates, since the lender faces lower risk. At exactly 80% LTV, you're at the threshold most lenders allow for a HELOC — you'll qualify, but you're using the maximum available credit. At 90%+ LTV, most lenders won't approve a HELOC at all. The average US homeowner carrying a mortgage has around 45% LTV as of 2024, meaning most have substantial HELOC capacity.