People type this into search every day: how to calculate home equity.
The usual answer is “value minus the mortgage.” That is gross equity. It is not cash, and it is not what you take home after a sale.
This page is a labeled estimate. It is not an appraisal, and it is not personalized financial advice.
Value, then the liens, then the sale costs
The CFPB HELOC explainer defines available equity as the value of the home minus the amount you owe on the mortgage. Their home equity loan note uses the same subtraction and adds the warning: if you cannot pay the loan back, the lender could foreclose.
The CFPB What you should know about HELOCs booklet walks a small case. Appraised value $100,000. Lender uses 75% of that value, $75,000. Mortgage balance $40,000. Potential line: 75000 − 40000 = $35,000. That $35,000 is a credit limit, not a pile of cash.
Loan-to-value is the other view of the same split. The CFPB LTV note says LTV compares the amount you are financing with the appraised value. A higher LTV can mean mortgage insurance and a higher rate.
The home equity estimate calculator uses this formula:
home value − secured balances − estimated selling costs
Selling costs are a percent of the home value you type. The entered value is only an estimate. Those are the tool’s assumptions.
Fig 1
Three cuts, then the remainder
Gross equity is before sale costs. Net equity is after.
Subtract the mortgage and other liens. Then subtract the sale-cost percent of value.
The 6% default is a planning input in the tool, not a surveyed commission. Type the costs you actually expect. The net worth post is the household version of this subtraction. Home equity is one asset line inside that total.
Example 1: the published $480,000 house
Here are the calculator defaults:
- estimated home value: $480,000
- mortgage balance: $310,000
- other secured balances: $10,000
- estimated selling costs: 6%
Gross equity: 480000 − 310000 − 10000 = $160,000.00
Selling costs: 480000 × 0.06 = $28,800.00
Net equity after sale costs: 160000 − 28800 = $131,200.00
Loan-to-value: (310000 + 10000) ÷ 480000 = 66.7%
Calculator result
Home equity estimate
- Estimated home value
- $480,000.00
- Mortgage balance
- $310,000.00
- Other secured balances
- $10,000.00
- Estimated selling costs
- 6%
$131,200.00
estimated net equity after sale costs
- Gross equity
- $160,000.00
- Estimated selling costs
- $28,800.00
- Loan-to-value
- 66.7%
$131,200.00 is what remains on this snapshot after a 6% sale-cost haircut. It is not a HELOC offer.
Fig 2 · 1/3
A $480,000 value
Calculator defaults, after both liens and 6% costs
Secured debt
$320,000
Sale costs
$28,800
Net equity
$131,200
The $310,000 mortgage and $10,000 second lien are 66.7% of value.
Sale costs take $28,800. Net equity is $131,200.
The loan-to-value calculator on $320,000 of loans and a $480,000 value prints the same 66.7%, with estimated equity $160,000.00. That $160,000 is the gross figure. The equity tool then subtracts the $28,800.
Example 2: drop the second lien
Keep the $480,000 value, the $310,000 mortgage, and 6% costs. Set other liens to $0.
Gross equity: $170,000.00
Sale costs: still $28,800.00
Net equity: $141,200.00
LTV: 310000 ÷ 480000 = 64.6%
The $10,000 lien was $10,000 of net equity.
Example 3: 8% sale costs
Keep the default liens. Raise selling costs to 8%.
Gross equity: still $160,000.00
Sale costs: 480000 × 0.08 = $38,400.00
Net equity: $121,600.00
Calculator result
Home equity estimate
- Estimated selling costs
- 8%
$121,600.00
estimated net equity after sale costs
- Gross equity
- $160,000.00
- Estimated selling costs
- $38,400.00
- Loan-to-value
- 66.7%
Fig 3 · 1/2
Same house, two sale-cost rates
Defaults, then 8% instead of 6%
- Net equity
- Sale costs
| Category | Net equity | Sale costs |
|---|---|---|
| 6% costs | $131k | $29k |
| 8% costs | $122k | $38k |
6% costs leave $131,200.00 of net equity.
8% costs leave $121,600.00. The extra two points are $9,600.00.
Example 4: the mortgage is gone
- value: $480,000
- mortgage: $0
- other liens: $0
- selling costs: 6%
Gross equity: $480,000.00
Sale costs: $28,800.00
Net equity: $451,200.00
LTV: 0%
A paid-off house still has a sale-cost line if you sell it. Keep the house and the $28,800 stays on paper.
Example 5: almost no room after a sale
- value: $380,000
- mortgage: $340,000
- other liens: $15,000
- selling costs: 6%
Gross equity: 380000 − 340000 − 15000 = $25,000.00
Sale costs: 380000 × 0.06 = $22,800.00
Net equity: $2,200.00
LTV: 355000 ÷ 380000 = 93.4%
Calculator result
Home equity estimate
- Estimated home value
- $380,000.00
- Mortgage balance
- $340,000.00
- Other secured balances
- $15,000.00
$2,200.00
estimated net equity after sale costs
- Gross equity
- $25,000.00
- Estimated selling costs
- $22,800.00
- Loan-to-value
- 93.4%
Gross equity still looks like $25,000. After sale costs you have $2,200. That is the common “we have equity” surprise.
Example 6: what if the value rises 10%
Keep the default $310,000 mortgage and $10,000 lien. Value becomes $528,000.
Gross equity: 528000 − 320000 = $208,000.00
Sale costs: 528000 × 0.06 = $31,680.00
Net equity: $176,320.00
LTV: 320000 ÷ 528000 = 60.6%
Net equity rose $45,120.00 from the $131,200.00 default. That is a 34.4% jump in the leftover, from a 10% value change, because the debt did not move.
Example 7: what if the value falls 10%
Value $432,000. Same $320,000 of liens. 6% costs.
Gross equity: $112,000.00
Sale costs: $25,920.00
Net equity: $86,080.00
LTV: 74.1%
Net equity fell $45,120.00. Same dollar swing as the rise, opposite sign.
Fig 4 · 1/2
Net equity when value moves
Liens stay $320,000. Costs stay 6% of value.
Net equity
- Net after 6%
- Gross equity
| Point | Net after 6% | Gross equity |
|---|---|---|
| $432k | $86k | $112k |
| $480k | $131k | $160k |
| $528k | $176k | $208k |
At $432,000 the net leftover is $86,080.
At $528,000 it is $176,320. The debt did not move with the price.
Example 8: the common mistake, treat $160,000 as cash
Someone reads gross equity and spends it.
Defaults again: gross $160,000.00, net $131,200.00.
Set selling costs to 0% and the tool prints $160,000.00. That 0% run is useful as a ceiling. It is not a sale.
A HELOC is also not that $160,000. The CFPB booklet used 75% of value minus the first mortgage. On these defaults that sketch is 480000 × 0.75 − 310000 = $50,000, then the $10,000 second lien still sits in front of new credit. Lenders use their own cap, income, and credit tests. The calculator does not approve a line.
Fig 5 · 1/2
Gross is not take-home
Calculator defaults
Leftover
Gross equity
$160,000
Net after 6%
$131,200
Gross equity is $160,000.00.
Net after 6% sale costs is $131,200.00.
Example 9: a $40,000 HELOC already drawn
- value: $480,000
- mortgage: $310,000
- other liens: $40,000
- selling costs: 6%
Gross equity: $130,000.00
Sale costs: $28,800.00
Net equity: $101,200.00
LTV: 350000 ÷ 480000 = 72.9%
The LTV calculator on $350,000 and $480,000 prints the same 72.9% and estimated equity $130,000.00.
Example 10: a smaller house
- value: $220,000
- mortgage: $165,000
- other liens: $0
- selling costs: 6%
Gross equity: $55,000.00
Sale costs: $13,200.00
Net equity: $41,800.00
LTV: 75%
Same 6% rate. The haircut is smaller in dollars and the same share of value.
The ten snapshots next to each other
| Example | Value | Liens | Cost rate | Gross | Sale costs | Net | LTV |
|---|---|---|---|---|---|---|---|
| 1. Defaults | $480,000 | $320,000 | 6% | $160,000 | $28,800 | $131,200 | 66.7% |
| 2. No second lien | $480,000 | $310,000 | 6% | $170,000 | $28,800 | $141,200 | 64.6% |
| 3. 8% costs | $480,000 | $320,000 | 8% | $160,000 | $38,400 | $121,600 | 66.7% |
| 4. Paid off | $480,000 | $0 | 6% | $480,000 | $28,800 | $451,200 | 0% |
| 5. High LTV | $380,000 | $355,000 | 6% | $25,000 | $22,800 | $2,200 | 93.4% |
| 6. Value +10% | $528,000 | $320,000 | 6% | $208,000 | $31,680 | $176,320 | 60.6% |
| 7. Value −10% | $432,000 | $320,000 | 6% | $112,000 | $25,920 | $86,080 | 74.1% |
| 8. Costs left at 0% | $480,000 | $320,000 | 0% | $160,000 | $0 | $160,000 | 66.7% |
| 9. $40,000 HELOC | $480,000 | $350,000 | 6% | $130,000 | $28,800 | $101,200 | 72.9% |
| 10. Smaller house | $220,000 | $165,000 | 6% | $55,000 | $13,200 | $41,800 | 75% |
Open the home equity calculator with a current value estimate, every lien that is secured by the house, and a sale-cost percent you can defend. If the question is only the financed share, the loan-to-value calculator is the shorter tool. If you are adding the house to a household snapshot, use net worth.