What Is Home Equity and How Do I Calculate It?

Home equity can be calculated as the current market value of your home, minus what you owe. A gain in home equity comes from paying down the balance of your mortgage, and/or an increase in your home’s market value over time.

For example, if your home is appraised at $400,000 and the remainder of your mortgage balance is $150,000, that would give you $250,000 in equity.

(market value – mortgage balance = equity)

Importantly, if you believe your home has gained value since you purchased it, consider getting an appraisal before you apply for a HELOC. This will potentially give you access to more funds if you need them.

There are other factors at play in determining the amount of your HELOC, but understanding how to calculate your home’s equity value will give you a good starting point.

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