What Is Home Equity and How Do You Calculate It?

Your home equity is the difference between your property's current market value and the remaining balance on your mortgage. Home equity represents the portion of your home that you truly own—and it can be a valuable tool when considering financing options for your renovation.

To calculate your home equity:

Home Equity = Current Home Value – Mortgage Balance

For example, if your home is worth $400,000 and your remaining mortgage balance is $250,000, your home equity would be $150,000.

How to Calculate CLTV (Combined Loan-to-Value)

CLTV is calculated by adding your existing mortgage balance with any additional loans you're considering (such as a HELOC or HELOAN), divided by the current value of your home:

CLTV = (Total Loan Balances ÷ Home Value) × 100

Example: If you take out an additional $100,000 loan on top of your $250,000 mortgage, your total loan balances would be $350,000. With a $400,000 home value:

CLTV = ($350,000 ÷ $400,000) × 100 = 87.5%

*The information provided on this page is for informational purposes only and does not constitute financial advice. Loan terms, rates, and eligibility criteria can vary by lender and individual circumstances. Always consult with a licensed financial advisor, mortgage specialist, or tax professional before making borrowing decisions.*