Your equity is simply your home's current market value minus everything you owe against it.
Home equity = Home value − (First mortgage + Second lien) LTV ratio = Total mortgage debt ÷ Home value Available equity at a given LTV cap = (Home value × LTV%) − Current mortgage debt.
Why the LTV cap matters
Lenders will not let you borrow against 100% of your equity. Most HELOC and home equity loan products cap combined LTV at 80-85%; some go to 90% for borrowers with excellent credit. The gap between your current LTV and the cap is what determines how much you can actually access.
Building equity faster
Two levers increase equity: paying down principal (accelerated by extra payments) and home value appreciation (outside your control but historically averages 3-5%/year long-term). Use the Amortization Calculator to see how extra payments build equity faster than the standard schedule.
Subtract everything you owe against the home (first mortgage plus any second lien) from its current market value. On a $480,000 home with a $280,000 mortgage, equity is $200,000.
What is a good loan-to-value ratio?
Below 80% LTV is considered strong — it eliminates PMI on a conventional loan and qualifies you for the best HELOC and refinance terms. Below 50% LTV is excellent and maximizes borrowing flexibility.
How much of my equity can I actually borrow?
Most lenders cap combined LTV at 80-85%, meaning you typically cannot access the final 15-20% of your equity through a HELOC or home equity loan without exceptional credit qualifying you for a higher cap.
Does home value appreciation count as equity?
Yes. If your home was worth $400,000 when purchased and is now worth $480,000, that $80,000 gain is unrealized equity, in addition to whatever principal you have paid down.
How often should I check my home equity?
Annually is reasonable for most homeowners, or before any major financial decision involving your home — refinancing, a HELOC application, or deciding whether PMI can be removed.