Quick summary: Learn how to remove PMI without refinancing, compare cancellation routes, calculate your equity target, and prepare a strong servicer request. Before you shop for a refinance, give your current mortgage a 20-minute review. If you have a conventional loan with private mortgage insurance, you may be able to remove PMI through your existing loan servicer—without replacing your mortgage, paying refinance closing costs, or giving up your current interest rate. The right route depends on what kind of mortgage insurance you have, your unpaid principal balance, the home’s accepted value, your payment history, and your servicer’s rules. An online home-value estimate alone will not cancel PMI, and reaching 20% equity does not always make the charge disappear automatically. Use this planning reset to identify your situation, choose the least expensive eligible path, and prepare a clean request for the coming week. Start with the line item on your mortgage statement F...
How Much Home Equity Do I Have? A Simple Homeowner Guide
If you own a home, there is a good chance that a significant portion of your wealth is tied up in your property. But how much of your home do you actually own?
The answer comes down to home equity.
Understanding your home equity can help you make smarter decisions about a HELOC, home equity loan, refinancing, renovations, or even selling your home.
The good news is that calculating home equity is relatively simple.
What Is Home Equity?
Home equity is the difference between the current market value of your home and the amount you still owe on loans secured by the property.
The basic formula is:
Home Equity = Current Home Value − Outstanding Mortgage Balance
For example, suppose:
- Your home is worth $500,000
- You still owe $300,000 on your mortgage
Your estimated home equity would be:
$500,000 − $300,000 = $200,000
That means you have approximately $200,000 in home equity.
How to Calculate Your Home Equity
You can estimate your equity in three steps.
Step 1: Estimate Your Home's Current Value
Do not automatically use the price you originally paid for the house.
Your home's market value may have increased or decreased since you purchased it.
You can start by looking at recent comparable home sales in your area or online home-value estimates. For a lending decision, however, a lender may require a professional appraisal or another approved valuation method.
Suppose your estimated home value is $600,000.
Step 2: Find Your Current Mortgage Balance
Check your latest mortgage statement or online mortgage account.
Look for your principal balance, not simply your original loan amount.
Suppose you currently owe $360,000.
Step 3: Subtract Your Mortgage Balance
Now calculate:
$600,000 − $360,000 = $240,000
Your estimated home equity is $240,000.
What Is Your Home Equity Percentage?
It can also be useful to know what percentage of your home's value you own.
Use this formula:
Home Equity Percentage = Home Equity ÷ Home Value × 100
Using our previous example:
$240,000 ÷ $600,000 × 100 = 40%
You therefore have approximately 40% equity in the property.
Another number lenders commonly consider is your loan-to-value ratio (LTV).
In this example:
$360,000 ÷ $600,000 = 60% LTV
Generally, more equity means a lower LTV.
Home Equity Calculator Example
Here is another simple example:
| Item | Amount |
|---|---|
| Estimated home value | $450,000 |
| Mortgage balance | $280,000 |
| Estimated home equity | $170,000 |
| Approximate equity percentage | 37.8% |
| Approximate LTV | 62.2% |
Remember that this is only an estimate. Your actual home value and the amount a lender allows you to borrow can be different.
What Causes Home Equity to Increase?
Home equity can grow in several ways.
Paying down your mortgage: Part of your mortgage payment generally reduces your principal balance over time.
Home appreciation: If property values in your area rise, your home's market value may increase.
Home improvements: Certain renovations may increase a property's value, although improvements do not necessarily add dollar-for-dollar value.
Making additional principal payments: Paying extra toward principal can reduce your loan balance faster.
Can Home Equity Decrease?
Yes.
If home prices decline, your equity can fall even if you continue making mortgage payments.
Equity can also decrease when you borrow against your home through certain home-equity products.
For example, imagine your home is worth $500,000 and your total debt secured by the property increases. Your remaining equity will generally decline unless the home's value increases enough to offset the additional borrowing.
That is why home equity should not be treated like free money.
How Much Home Equity Can You Borrow?
Having $200,000 of equity does not necessarily mean you can borrow $200,000.
Lenders generally limit borrowing based on factors that may include:
- Home value
- Existing mortgage balance
- Combined loan-to-value ratio
- Credit history
- Income
- Debt-to-income ratio
- Loan program and lender requirements
For a HELOC or home equity loan, the lender may calculate a combined loan-to-value ratio (CLTV) that includes your first mortgage plus the new borrowing.
Example
Suppose:
Home value: $500,000
Mortgage balance: $300,000
If a particular lender permitted a maximum CLTV of 80%, the calculation would be:
$500,000 × 80% = $400,000
Then:
$400,000 − $300,000 = $100,000
Under that hypothetical limit, up to approximately $100,000 might be available before considering the lender's other qualification requirements.
This is only an example. Actual limits and eligibility vary by lender and borrower.
What Can You Do With Home Equity?
Homeowners sometimes use equity for major financial needs such as:
- Home renovations
- Roof replacement
- HVAC replacement
- Major repairs
- Debt consolidation
- Education expenses
- Other large expenses
Common ways of accessing equity include a HELOC, home equity loan, and cash-out refinance.
These products work differently and can have very different costs and risks.
HELOC
A home equity line of credit provides a revolving credit line secured by your home. Many HELOCs have variable interest rates.
Home Equity Loan
A home equity loan generally provides a lump sum that is repaid over a specified period. Many home equity loans have fixed rates.
Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a larger mortgage and gives you the difference, minus applicable costs.
Whether refinancing makes sense can depend heavily on the rate and terms of your existing mortgage compared with the new loan.
HELOC vs. Home Equity Loan
If you already know approximately how much equity you have, your next question may be which borrowing option makes sense.
A HELOC may offer flexibility when expenses occur over time, while a home equity loan may provide more predictable payments for a known one-time expense.
Related: HELOC vs. Home Equity Loan for Home Improvements in 2026: Which Is Better?
Add a link from that sentence to your existing article.
Don't Forget the Risks
HELOCs, home equity loans, and cash-out refinances are secured by your home.
That makes them very different from unsecured borrowing.
Failing to make required payments can have serious consequences, potentially including foreclosure.
Before borrowing against your home, consider the total borrowing cost, interest rate structure, fees, monthly payment, repayment period, and whether the expense justifies putting additional debt against your property.
The Bottom Line
Calculating your home equity starts with a simple formula:
Home Value − Mortgage Balance = Home Equity
But the amount of equity you have and the amount you can actually borrow are not necessarily the same.
Knowing your approximate home equity gives you a useful starting point when considering a HELOC, home equity loan, refinance, home improvement project, or future home sale.
Before making a major borrowing decision, compare multiple options and verify current requirements and costs with qualified lenders or financial professionals.
This article is for general informational and educational purposes only and does not constitute financial, tax, legal, or lending advice.
Related: HELOC vs. Home Equity Loan for Home Improvements in 2026: Which Is Better?
Related: Learn how to calculate your home equity.