Current Equity
Available to Borrow
Current LTV
Max LTV After Borrow
Estimated Monthly
| Scenario | Total Debt | Equity Remaining | LTV Ratio |
|---|---|---|---|
| Current | -- | -- | -- |
| Max Borrow | -- | -- | -- |
Home Equity: A Comprehensive Guide
The Home Equity Calculator determines usable equity for loans or HELOCs. Input home value, balances, LTV, rate/term for borrowable amount, LTV, and payments. Compares current vs max with charts/tables. This guide covers equity types, access methods, calculations, pros/cons, and tips.
What is Home Equity?
Value minus liens. Builds via payments, appreciation.
Types: Loan vs HELOC
Loan: Lump sum, fixed rate/payment. HELOC: Revolving credit, variable rate, interest-only draw.
Why Tap Equity?
- Lower Rates: Secured, cheaper than unsecured.
- Tax Deductible: Interest if for home improvement (consult tax pro).
- Flexibility: Renovations, debt consolidation, emergencies.
- No PMI: Often if LTV <80%.
Pair with Debt Consolidation.
How Equity is Calculated
Steps:
- Equity: Value - debts.
- Max Debt: Value × max LTV/100.
- Borrowable: Max debt - current debts.
- LTV: (Debts / value) × 100.
- Payment: EMI on borrowable at rate/term.
Example: $400k home, $200k mortgage, 80% LTV → $120k available.
LTV and CLTV
Loan-to-Value; Combined includes all liens.
Pros and Cons
Pros: Low rates, large amounts, deductible interest.
Cons: Foreclosure risk, fees, variable rates (HELOC).
When to Use Equity
- Equity >20%.
- Good credit for best rates.
- Home improvements adding value.
- Debt consolidation saving interest.
Use Refinance Break-Even.
Tips for Success
- Shop Lenders: Banks, credit unions.
- Keep LTV Low: Avoid PMI.
- Fixed vs Variable: Predictability.
- Borrow Wisely: Only what needed.
Common Mistakes
- Overborrowing: House at risk.
- Ignoring Fees: Closing 2-5%.
- Market Drops: Underwater risk.
- Variable Spikes: Payment shock.
Alternatives
Cash-out refinance, personal loans, credit cards (higher rates).
Conclusion
Home equity offers affordable funds if managed wisely. Our calculator shows exact potential. Explore Mortgage or Line of Credit.