Home Equity Calculator

About Home Equity Calculator

Calculate your home equity. This calculator provides instant results with step-by-step explanations to help you understand the calculation process.

Formula

How to use this calculator

1. Enter your home’s current market value, not what you originally paid for it.
2. Enter the remaining balance on your mortgage and any other loans tied to the home.
3. Subtract the total debt from the home value to find your equity.
4. If you want the equity percentage, divide the equity by the home value and multiply by \(100\).

The formula explained

Home equity is computed by subtracting what you still owe on the home from what the home is worth. Equity percentage shows what share of the home value you own free and clear.

• V = the current market value of the home
• D = the total debt owed on the home, including the mortgage and any other liens
• E = the home equity
• P = the equity percentage

Step by step method

1. Find the current market value of the home, \(V\).
2. Find the total debt on the home, \(D\).
3. Compute equity with \(E = V - D\).
4. If needed, compute the equity percentage with \(P = \\frac{E}{V} \\times 100\).

Worked example

Problem. A house is worth \(350{,}000\) dollars, and the remaining mortgage balance is \(220{,}000\) dollars. What is the home equity and equity percentage?

1. Use \(E = V - D\). So \(E = 350{,}000 - 220{,}000\).
2. Calculate \(E = 130{,}000\).
3. Find the percentage, \(P = \\frac{130{,}000}{350{,}000} \\times 100 \\approx 37.14\\%\).

Tips and common mistakes

• Use the current market value, because equity based on an old purchase price can be misleading.
• If your total debt is greater than the home value, your equity is negative, which means you owe more than the home is worth.

Frequently asked questions