Home Equity Calculator
Home equity is what your house is worth minus what you still owe on it. On a $450,000 home with a $280,000 mortgage, that is $170,000 of equity and a 62% loan-to-value ratio. Lenders typically cap a cash-out refinance at 80% of value, which on those numbers leaves about $80,000 reachable before closing costs.
On this page
How the maths works
There is no formula to memorise here, which is exactly why this number is worth knowing before you talk to anyone. Equity is one subtraction:
Equity = current market value − what you still owe
Loan-to-value is the same two numbers as a ratio, and it is the figure a lender actually prices from:
LTV = balance ÷ value × 100
The third line adds a lender ceiling. Most conventional cash-out refinances stop at 80% of the home's value, so the amount reachable is whatever is left after the existing balance comes out of that 80%:
Reachable = (0.80 × value) − balance
That is a ceiling, not a promise. Closing costs come out of it, the ceiling itself moves with credit score, property type and occupancy, and the value a lender uses is the appraised one rather than the one you typed in.
Two things this figure is not
It is not cash you have. Equity only becomes money through a refinance, a second lien or a sale, and each of those has a cost. Someone with $170,000 of equity and no way to service a larger payment has $170,000 of equity and no cash.
It is not what a lender will agree the home is worth. Appraisals come in under expectations often enough that it is worth treating your own estimate as the optimistic end. If the number here is close to a threshold that matters, it is close on paper only.
What this estimate leaves out
Everything except those two numbers. It does not know your credit, your income, what else is secured against the property, or what closing costs would be on a new loan. It states no interest rate and no monthly payment, because neither can be worked out from a value and a balance, and BEDRWay is not a lender and does not quote rates.
How much an 80% ceiling reaches at other numbers
| Home worth | Still owed $200,000 | Still owed $300,000 | Still owed $400,000 |
|---|---|---|---|
| $350,000 | $80,000 | $0 | $0 |
| $450,000 | $160,000 | $60,000 | $0 |
| $550,000 | $240,000 | $140,000 | $40,000 |
| $650,000 | $320,000 | $220,000 | $120,000 |
| $750,000 | $400,000 | $300,000 | $200,000 |
Frequently asked questions
How much equity do I need to take cash out?
Most conventional cash-out refinances stop at 80% of the home's value, so you need more than 20% equity before there is anything to take. A VA cash-out can go higher for eligible borrowers. The ceiling is the lender's policy, not a law, and it varies by credit and property type.
Does equity include what my home has gone up in value?
Yes. Equity is today's value minus today's payoff balance, so it grows both from paying the loan down and from the home appreciating. A lender will confirm the value with an appraisal, which can come in above or below what you expected.
Is a cash-out refinance the only way to use equity?
No. A home equity loan or a HELOC leaves your first mortgage alone and adds a second lien, which matters if your current rate is low. Which one costs less depends on the rate on your existing loan and how much you need.
Sources
- Fannie Mae Selling Guide, cash-out refinance LTV limits, retrieved 2026-08-24
Last updated: August 25, 2026