*This post was created in collaboration with Alpine Credits
How much equity do you have in your home, and why is it important for you to find out?
Maybe you are a homeowner looking to sell and want to know how much you can get for your home. Or perhaps you want to cover a big expense, for example with a second mortgage.
Whatever the case may be, understanding your home equity is important, since it sets how much you can borrow against your home equity. But how do you calculate how much you have?
Key Points
1. Home equity is your home’s current value minus what you still owe on your mortgage.
2. Use the calculator below, or the simple formula, to find out how much equity you have.
3. You can typically borrow up to 80% of your home’s value (minus your mortgage) through a second mortgage, HELOC, or refinance, or up to 55% with a reverse mortgage.
4. Your loan-to-value (LTV) ratio affects how much you can borrow and whether you need mortgage default insurance.
Home Equity Calculator
Use the home equity calculator below to estimate your equity and how much you might be able to borrow. Just enter your home’s current value and your remaining mortgage balance, then select Calculate.
Home Equity Calculator
Prefer to do the math yourself? Here is how.
How To Calculate Your Home Equity
Calculating your home equity is easy. All you need to know is your home’s current market value and the outstanding balance remaining on your mortgage. Once you have these figures, you can plug them into the following equation:
Home Equity = Property Value minus Remaining Mortgage Balance
Calculating Your Home Equity: An Example
For example, let’s say your home is currently valued at $750,000, and you still have $300,000 left on your mortgage. In this case, you would have $450,000 in equity.
| Property value | $750,000 |
| Minus current mortgage balance | $300,000 |
| Home equity | $450,000 |
How To Find Your Home Value
You must use the most accurate figures in your calculation when determining how much equity you have in your home. That means understanding exactly what your home is worth based on current market conditions.
To find out what your home is worth, you can enlist the services of a real estate professional who can look at other similar homes in the area that have recently sold.
Alternatively, you can have your home appraised by a professional. This may provide you with a more accurate idea of how much your home is currently worth. The appraiser will look at various factors, such as the age, size, condition, and location of the home, along with recently sold properties in the neighbourhood, to arrive at an accurate property value.
How To Find Your Current Mortgage Balance
Lenders typically send out a mortgage statement to borrowers at least once a year that details their mortgage balance. However, to get a more up-to-date balance, you can call your bank or log in to your online bank account.
How To Increase Your Home Equity
The more equity you have, the more you can borrow, and the more you keep when you sell. There are two main ways to build your home equity: pay down your mortgage faster, and increase your home’s value. Making extra or lump-sum payments toward your principal shrinks what you owe, while renovations and market appreciation lift what your home is worth. Both widen the gap between your home’s value and your mortgage balance, which is your equity.
How Much Can You Borrow Through Your Home Equity?
The amount you can borrow through your home equity will vary based on your lender and the type of loan you want. As a general rule, most home equity products cap your total borrowing at 80% of your home’s value.
| Product | Maximum You Can Borrow |
|---|---|
| Second mortgage | Up to 80% of your home’s appraised value, less your mortgage balance |
| Home equity line of credit (HELOC) | Up to 65% of your home’s value on its own, or up to 80% combined with your mortgage |
| Reverse mortgage (age 55+) | Up to 55% of your home’s appraised value, less your mortgage balance |
| Refinance | Up to 80% of your home’s appraised value, less your mortgage balance |
How To Calculate How Much You Can Borrow
To illustrate how this works, here is what our $750,000 example home could access, assuming a $300,000 mortgage balance.
| Product | Calculation | Amount You Can Borrow |
|---|---|---|
| Second mortgage or refinance | ($750,000 x 80%) minus $300,000 | $300,000 |
| HELOC | Up to 65% of value ($487,500), capped by the 80% combined limit | $300,000 |
| Reverse mortgage | ($750,000 x 55%) minus $300,000 | $112,500 |
What Can You Use Your Home Equity For?
One of the biggest advantages of tapping your home equity is that you can use the money for almost anything. Common uses include:
- Home renovations that increase your property value
- Consolidating and paying off high-interest credit card debt at a lower rate
- Education costs
- Using your equity as a down payment on another property
- Covering a large emergency expense
- Starting or investing in a business
Because the loan is secured by your home, rates are usually lower than unsecured credit. Just remember that your home is on the line if you cannot repay.
What Types Of Loans Can You Get Using Your Home Equity?
You can access the equity in your home in a few ways.
Home Equity Loans
A home equity loan, also referred to as a second mortgage, is a type of loan that allows you to borrow against your home’s equity. You can borrow up to 80% of your home’s value, less your mortgage balance. Like a traditional loan, you are given a lump sum of money, which you must then repay via fixed installments over a specific loan term.
HELOCs
A HELOC, or home equity line of credit, is a type of credit line that allows you to access the equity in your home. You can borrow up to 65% of your home’s value on its own, which would be considered your credit limit.
You can access funds from your HELOC as often as you wish, up to the credit limit. Interest is only charged on the amount withdrawn. Once that money is repaid, you can continue to withdraw from your HELOC over and over as required.
It should be noted that HELOCs include draw and repayment periods. Fixed repayments are not required during the draw period. Instead, only interest must be paid on the withdrawn amount during that time.
Where Can You Get A HELOC?
Many big banks and credit unions offer HELOCs. However, a strong income and good credit are typically required. Plus, the loan process may take days.
If you need fast approval and do not have the best credit score or strongest income, consider a lender that can approve your application quickly, does not conduct a credit check, or does not require a substantial income.
Alpine Credits is a great option to consider. If you’re a homeowner, you can get approved for an equity loan in as little as 24 hours and funded shortly after. Instead of basing your loan approval on your credit history or income, Alpine Credits looks at your home equity.
Reverse Mortgages
A reverse mortgage allows you to borrow up to 55% of the value of your home, minus your outstanding mortgage balance, without the need to sell your home. No fixed mortgage payments are required while you still live in the home. Instead, the loan would be due for repayment if you move, sell your home, or if the last borrower passes away. You must be at least 55 years old to qualify for a reverse mortgage.
Refinancing
Refinancing involves taking out a new mortgage with a different interest rate and terms to replace an existing mortgage. The lender uses the funds from the new mortgage to pay off the remaining balance of the existing mortgage. If you can qualify for a lower interest rate on a new mortgage, you could owe less on your new mortgage and lower your monthly payments.
Can Your LTV Ratio Affect The Amount You Can Borrow?
Lenders look at a few key factors when assessing a mortgage application to determine risk, and the loan-to-value (LTV) ratio is one of them.
The lower the LTV ratio, the better. An LTV ratio over 80% is considered high and would require mortgage default insurance when first buying a home. An LTV ratio above 95% is typically not accepted. When you already have a mortgage and add a second loan, lenders look at your combined loan-to-value (CLTV), which for most home equity products cannot exceed 80%.
You can lower your LTV ratio by making a larger down payment. This would reduce the amount you have to borrow relative to the value of the home. Your LTV ratio affects your ability to get a mortgage or home equity loan, and it also determines whether you will have to pay for mortgage default insurance.
How To Calculate Your LTV Ratio
An LTV ratio is a measure of the value of a home relative to the mortgage amount. This number helps determine the maximum amount you can borrow. If you already have a mortgage, your LTV ratio is based on your remaining mortgage balance.
To determine your LTV ratio, divide the loan amount by the home’s value, then multiply by 100 to get a percentage. For example, a $300,000 mortgage on a $750,000 home is an LTV of 40% ($300,000 divided by $750,000, times 100).
Final Thoughts
If you need a loan and want to borrow against your home, you will want to know how to calculate how much equity you have. Luckily, calculating it is relatively easy. Once you know how much equity you have built up in your home, you will understand how much you can access if you need a loan. From there, it is worth weighing when tapping into your home equity is a good choice for your goals.
Home Equity FAQs
Home equity refers to a homeowner’s interest in a property. In other words, home equity is the difference between the current market value of a home and any outstanding mortgage balance.
LTV stands for loan-to-value ratio, which is the measure of a loan relative to the value of a home. LTV is expressed as a percentage.
You can hire a certified real estate appraiser to have the value of your home professionally appraised. Knowing the value of your home serves many purposes, including applying for a home equity loan or determining a fair listing price if you intend to sell.
If you are buying a home, you can make a larger down payment to increase your home equity right from the start. If you are already a homeowner, you can make upgrades to your home to increase its value, or make lump sum payments toward the principal of your mortgage as your loan agreement permits.
Yes, there are typically fees associated with accessing your home equity, such as appraisal fees, title search fees, title insurance fees, and legal fees.
References
- Financial Consumer Agency of Canada. (2026). Using the equity in your home. Government of Canada. https://www.canada.ca/en/financial-consumer-agency/services/mortgages/using-home-equity.html
- Financial Consumer Agency of Canada. (2026). Home equity lines of credit (HELOC). Government of Canada. https://www.canada.ca/en/financial-consumer-agency/services/mortgages/home-equity-line-credit.html
