Equity is your ownership stake, not spending money
Home equity grows two ways — paying down the mortgage balance and the home's value rising — and it represents the portion of the home you actually own outright. It is real net worth, but turning it into cash (selling, or borrowing against it) always comes with costs or obligations, so treat the "amount you could borrow" figure as a ceiling, not a target.
Building equity faster
Extra mortgage payments go straight to principal, which builds equity faster than waiting on appreciation alone. Use the Mortgage Payoff Calculator to see exactly how much sooner extra payments could get you to full ownership — and more equity along the way.
Frequently asked questions
How is home equity calculated?
Equity is your home's current market value minus what you still owe on it (your mortgage balance, plus any other loans secured against the home, like a second lien or existing HELOC).
How much of my equity can I actually borrow?
Lenders rarely let you borrow 100% of your equity. Most cap total borrowing (your mortgage plus any new loan) at 80–85% of your home's value — called the combined loan-to-value (CLTV) ratio — to keep a safety cushion.
What is a HELOC?
A Home Equity Line of Credit is a revolving credit line secured by your home's equity, similar to a credit card but usually with a much lower interest rate. A home equity loan is the lump-sum version of the same idea.
Does paying down my mortgage build equity faster?
Yes — every payment of principal (and any home value appreciation) increases your equity. See the Mortgage Payoff Calculator to see how extra payments accelerate that.
Last updated: June 2026