How much home equity do I have?
By David Chen · Published October 11, 2026
The question sounds like it has one answer, and the number most people arrive at — value minus mortgage balance — is a real figure and a perfectly honest one. It is also the least useful of the three numbers that get called equity, because it is not the number any decision is actually made against. A lender lends against a ceiling. A sale returns proceeds. Neither of those is the same as your stake, and the gap between them is where the surprises live.
The example used throughout is a $500,000 house with a $320,000 mortgage balance. There is $180,000 of equity on paper. Only $80,000 of it is reachable by borrowing, and only $150,000 would reach you through a sale.
Three measurements, one house
These three figures are usually quoted as though they were interchangeable, and at the point of decision they are not:
| Measurement | Amount | What it answers |
|---|---|---|
| Equity on paper | $180,000 | 36.00% of the $500,000 value — what you own if the mortgage vanished |
| Borrowable at 80% CLTV | $80,000 | 44.44% of that equity — what a lender will actually release today |
| Net if you sold | $150,000 | After $30,000 of selling costs and the $320,000 balance is cleared |
A $500,000 house with a $320,000 mortgage. The 36.00% and 44.44% shares are calculated from the same figures in the table. Produced by our calculator and independently recomputed.
The middle row is the one worth pausing on. Borrowable room is 44.44% of the equity — less than half. That is not a fee or a penalty, and nothing has been taken from you. It is the consequence of a lending rule and a number that does not move, and the rest of this page is about how those two interact.
The ceiling is set by the house, not by you
Every equity-secured loan is written against a maximum combined loan-to-value ratio: the total of all borrowing secured on the property, divided by its value, cannot exceed some limit. At 80% on a $500,000 house, total secured debt tops out at $400,000. The first mortgage already occupies $320,000 of that:
80% × $500,000 = $400,000 ceiling; $400,000 − $320,000 = $80,000 available
Everything about the borrowing figures follows from that one line. The remaining $100,000 of equity is above the line the lender is prepared to lend against — it is not lost, but no product on the standard menu will hand it to you without either the value rising or the balance falling.
Two routes, two very different numbers
Put the two usable routes side by side. Both start from the same $180,000 — they just part company over what stands between you and it:
| Route | Reaches you | Does not reach you | Equity |
|---|---|---|---|
| Borrow against it | $80,000 | $100,000 — held back by the 80% ceiling | $180,000 |
| Sell the house | $150,000 | $30,000 — consumed by the cost of selling | $180,000 |
The $100,000 and the $30,000 overlap: selling does not release the ceiling, and borrowing does not pay the selling costs. Both columns account for the same $180,000 in full. Produced by our calculator and independently recomputed.
The borrowing route leaves $100,000 behind and the selling route leaves $30,000 behind, and the two withheld amounts are not alternatives — they are different obstacles that happen to sit on different routes. Borrowing against the house does nothing about the cost of selling it, and selling it does not make the ceiling disappear. A household with $180,000 of equity who needs $120,000 in cash has neither route open, and that is the whole point of separating the figures.
There is also a cost to the borrowing route that the table does not show. Releasing $80,000 is not free — at 2% in origination and closing charges, the cash actually in hand is $78,400, so the amount that reaches you is smaller again. HELOC versus home equity loan works through what those charges look like across the two main product shapes.
Equity does not hold still, and neither does the ceiling
Everything above is a snapshot. House prices move, and because the borrowing room is a narrow gap between a moving ceiling and a fixed balance, it moves far more violently than the equity figure does:
| Home value | Equity | Change in equity | Loan-to-value | Borrowable | Change in room |
|---|---|---|---|---|---|
| $400,000 — down 20% | $80,000 | −55.56% | 80.00% | $0 | −100% |
| $425,000 — down 15% | $105,000 | −41.67% | 75.29% | $20,000 | −75% |
| $450,000 — down 10% | $130,000 | −27.78% | 71.11% | $40,000 | −50% |
| $475,000 — down 5% | $155,000 | −13.89% | 67.37% | $60,000 | −25% |
| $525,000 — up 5% | $205,000 | +13.89% | 60.95% | $100,000 | +25% |
| $550,000 — up 10% | $230,000 | +27.78% | 58.18% | $120,000 | +50% |
Only the home value changes; the $320,000 balance and the 80% ceiling rule are held fixed. Change columns are measured against the $500,000 base case. Produced by our calculator and independently recomputed.
Read the last two columns down the table and the shape of the risk becomes clear. A 10% fall in the house price costs 27.78% of the equity but 50% of the borrowing room. At 20% the equity is still a healthy $80,000 and the borrowing room is zero — the balance exactly fills the ceiling, so there is no product that can lend against the house at all, regardless of income or credit.
This asymmetry is not a quirk of the numbers chosen here. It follows from the structure: equity is a difference in which both terms move, while borrowing room is the distance between a moving ceiling and a balance that does not move at all. The narrower that distance, the larger the percentage of it a given fall in value removes.
Why the 80% figure matters more than the balance
The two levers that restore borrowing room are unequal, and the difference is worth internalising. Repaying principal frees room one-for-one: each dollar repaid is a dollar of headroom. A rise in the house price frees room at 80 cents on the dollar, because the ceiling rises by 80% of the gain while the balance is untouched. And a fall in the price destroys room at 80 cents on the dollar as well — which is why the downside comes faster than the upside feels.
If the house falls to $450,000 the ceiling falls with it, to $360,000 — so restoring the original $80,000 of borrowing room would then require the balance down to $280,000, $40,000 further repaid than the $320,000 balance implies. A price fall and a repayment plan attack the same problem from opposite directions, and an owner who experiences both is not simply back where they started.
What this arithmetic leaves out, on purpose
- Whether a lender will approve you. The ceiling is a limit, not an entitlement. Approval turns on income, credit history and existing obligations, and this page deliberately computes none of those. A household with $80,000 of borrowing room and no room in its budget has $80,000 of room on paper only.
- Where the ceiling actually sits. The 80% used here is a common convention rather than a universal rule, and the figure differs by programme, product and lender. The arithmetic is driven entirely by that input — change it and every number on the page changes — which is why the real number belongs in the loan documents, not in an example.
- What selling would actually cost. The 6% used here is one illustrative figure for commission, transfer taxes, title work and the rest. It varies by market and by how the sale is arranged, and in some markets it is materially higher or lower. The point is that it is a percentage of the price, which is why it scales with the house rather than with your equity.
- That the money is borrowed, not withdrawn. A second loan secured on the home is still a loan. It has a payment, it has a term, and it makes the house the collateral. That changes what happens if circumstances turn, and no table of equity figures captures it.
How to use this
- Work out the borrowing room before shopping, not after. Take the ceiling you expect — say 80% of your home value — and subtract the balance. What remains is the absolute most any equity-secured product can release, before costs. The mortgage calculator prices what the resulting payment would be.
- Decide which figure your plan actually depends on. A renovation funded by borrowing needs the $80,000. A plan to downsize depends on the $150,000. Confusing the two leads to plans that do not survive contact with the paperwork, and cash-out refinance versus HELOC compares the two main ways of reaching the borrowing figure.
- If the goal is to clear other debts, compare the secured route against an unsecured one before assuming the lower headline rate wins. Debt consolidation versus a home equity loan shows a case where the cheaper-looking rate costs more overall.
- If the plan needs more room than exists, the honest options are to wait, to repay principal, or to choose a different plan. Refinancing can restructure the borrowing but does not create headroom against a fixed ceiling — how to refinance a mortgage covers what it does and does not change.
- Model the payment, not just the amount. An amortising personal loan calculator and an amortization schedule both show how a given balance behaves over time, which is the part a single equity figure always hides.
The short version
A $500,000 house with a $320,000 mortgage has $180,000 of equity on paper, but only $80,000 is reachable by borrowing and only $150,000 by selling — 44.44% and 83.33% of the headline figure respectively. The borrowing limit is set by the house rather than by what you own, so a 10% fall in value costs 27.78% of the equity but 50% of the borrowing room, and a 20% fall leaves the equity intact at $80,000 while the borrowing room goes to zero. Equity is a real asset. It is not a spending limit, and it is not one number.
Frequently asked questions
Why can’t I borrow all my equity?
Because the ceiling is set against the value of the house, not against what you own. A lender working to an 80% combined loan-to-value limit will let total borrowing reach 80% of the value and no further. On a $500,000 house that ceiling is $400,000; if $320,000 of that is already in use by the first mortgage, the remaining room is $80,000. The $100,000 between that and your $180,000 of equity is not withheld by anyone — it exists, it is simply above the line the lender is prepared to lend against.
Does paying down the mortgage increase what I can borrow?
Yes, and pound for pound. Every dollar of principal repaid frees a dollar of room under the ceiling, because the ceiling is a fixed dollar figure that depends only on the value. This is why the two levers are different in character: paying down the balance raises your borrowing room one-for-one, while a rise in the house price raises the ceiling by 80% of the increase and leaves 20% for you. Neither is fast, but they are not symmetric.
Why does selling leave me less than the equity figure?
Because selling costs money, and no loan product reimburses it. Commission, transfer taxes, title work and the other items on a sale typically run to a percentage of the price — 6% here, so $30,000 on a $500,000 house. That money comes out of the proceeds before the mortgage is cleared, which is why the cash that reaches you is smaller than the equity on paper even though nothing has gone wrong.
How can my borrowing room fall faster than my equity?
Because the two are measured from different starting points. Equity is the difference between value and balance, so a fall in value hits it directly. Borrowing room is the gap between a ceiling that moves with value and a balance that does not move at all. When the gap was narrow to begin with, the same percentage fall in value removes a much larger share of it. In the table above a 10% fall in value costs 27.78% of the equity but 50% of the borrowing room.
Is equity the same as being able to afford something?
No, and the distinction matters more than it sounds. Equity is a stake in an asset; borrowing against it converts that stake into a debt secured on your home. The lender’s decision will turn on your income and credit as much as on the house, and a second loan on the property changes what happens if you cannot pay. A large equity figure is a real asset and not a spending limit.
Related guides
- HELOC vs home equity loan — The same $60,000 at the same 8.00% costs either $27,356 or $108,447 in interest. What the two products share, where they diverge, and why the draw period drives the whole bill.
- Cash-out refinance vs HELOC — A cash-out refinance looks cheaper but reprices the loan you already had: $110,405 more interest in total, with a monthly payment $257.47 lower than the HELOC route.
- Debt consolidation vs a home equity loan — The 8.00% loan costs $3,208 more than the 11.50% one, because ten years beats five. Why the lower rate loses, and what the house is actually being put up against.
- How to refinance a mortgage — Why a lower rate can still cost you more: a 6.50% to 6.00% refinance cuts the payment by $371.38 and adds $93,849 of interest, while the same rate on a 20-year term saves $17,788.
Run your own numbers in the loan calculator.
Calculators for this topic
- Mortgage calculator — Monthly payment with property tax, home insurance, HOA and PMI folded in — the number that actually leaves your account, not just principal and interest.
- Amortization schedule — The full month-by-month and year-by-year breakdown of a fixed-rate loan, and how much interest an extra payment removes from the end of it.
- Personal loan calculator — Unsecured borrowing at the rates lenders actually quote, with the origination fee maths that decides whether the money is worth taking.
This guide is educational and is not financial advice. Figures were produced by our calculator and independently recomputed before publication; your lender's own documents govern your loan. Spot an error? Tell us — see also our disclaimer.