How to Calculate Home Equity

If you own a home, you’ve probably heard the term “home equity.” But what does it really mean – and how do you figure out how much you have?

First, let's start with why understanding your home equity is important in the first place. You may be able to borrow against your equity at a lower rate than a credit card to cover emergency costs or a large expense, consolidate your higher-rate debt, make home improvements that increase the overall value of your home – almost anything you need.

It's also important to know that you have loan options when it comes to using your equity – for example, with a .

Let’s dive further into what home equity is and how you can calculate how much of it you have.

What Is Home Equity?

Home equity is the part of your home that you truly own. It’s the difference between what your home is worth and how much you still owe on your mortgage.

Here’s a simple formula:

Home Equity = Current Market Value of Your Home – Remaining Mortgage Balance

For example, let’s say your home is worth $300,000 and you owe $180,000 on your mortgage:

$300,000 – $180,000 = $120,000 in home equity

That $120,000 is the amount of your home that you own.

How Did We Get Those Numbers?

Here’s how to find the information you need to figure out your equity:

1. Find Out What Your Home Is Worth

You can use an online home value estimator, check recent home sales in your area or get a professional appraisal.

Tip: Check with your potential lender before you get a professional appraisal to avoid paying for it twice. Some financial institutions (like Summit) can't use those to value your home and require their own appraisals.

2. Check Your Mortgage Balance

Look at your latest mortgage statement or log in to your mortgage account to see how much you owe.

How to Determine LTV (Loan-to-Value Ratio)

Now that you’ve determined your equity, you’ll also need to know your LTV.

What Is LTV and Why Is It Important?

LTV compares the amount you owe on your mortgage to the current appraised value of your home. Your LTV is a key factor lenders use to determine your home equity loan borrowing power, which means it plays a big role in your loan terms, interest rate and likelihood of approval.

A lower LTV (like 70% or 80%) often qualifies you for better rates.
A higher LTV (like 90%) may still qualify you for a home equity loan or line of credit, but could come with higher rates or different terms.

How to Calculate LTV

Here’s the simple formula:

LTV = (Current Mortgage Balance ÷ Appraised Home Value) × 100

Going back to our example, if your home is worth $300,000 and you owe $180,000 on your mortgage:
LTV = ($180,000 ÷ $300,000) × 100 = 60%

That means you have 40% equity in your home – and that’s great news if you’re looking to borrow!

At Summit, we offer rate tiers based on LTV – and you can easily compare how those rates change with 70%, 80% or 90% LTV using our HELOC rate chart.

We’ll Crunch the Numbers for You with Our Home Equity Calculator

Now that you’ve got a solid understanding of the what, why and how behind equity and LTV, we’ll let you in on a great shortcut for estimating your available equity based on loan-to-value. Summit Credit Union’s home equity calculator is fast, free and easy to use.

Now, Let’s Put Your Equity to Work!

can be a great way to get access to quick, easy money you can use for almost anything. So go ahead — check your numbers, use our resources and take charge of your financial future.

Let’s work together to make the most of your equity.

Whether you're wondering how to calculate home equity and LTV or just want to , we’re here to help you every step of the way. You can learn more about a Summit Credit Union home equity loan or line of credit or with an expert to talk through your goals, options and best next steps.

Then, a low standard variable rate (as low as 6.25% APR) after that. Plus, get approved online in 10 minutes to get you moving fast toward your goals!

Already have a HELOC? Refinance with Summit and save — starting with 0% for the first three months!