How to Calculate Home Equity Percentages

The higher your home equity percentage, the less of your home's value is needed to secure loans.

Home equity percentages refer to the percentage of the value of your home that is not secured by a loan, such as a mortgage or home equity loan. To calculate your home equity percentage, you need to know your home's value and how much you owe. Your home equity percentage may be important, because it can determine how much you can borrow as well as when you can stop paying for private mortgage insurance.

Things You'll Need

• Calculator

Instructions

1. Have your home appraised if you need an official home equity percentage, such as for canceling private mortgage insurance because your home has increased in value. If you do not need official documentation, you can estimate the value of your home.

2. Contact your lender to determine how much you owe on any loan that uses your home as collateral. If you have multiple loans, add up the total outstanding for all the loans. For example, if you have a $100,000 mortgage and a $50,000 home equity loan, your total would be $150,000.

3. Subtract the amount of money you owe against your home from your home's value to find the equity you have. For this example, if your home is worth $400,000, you would subtract $150,000 from $400,000 to get $250,000.

4. Divide the amount of equity in your home by your home's value to calculate your home equity percentage. In this example, you would divide $250,000 by $400,000 to find your home equity percentage is 0.625, or 62.5 percent.

References

• Federal Reserve: What You Should Know About Home Equity Lines of Credit
• Lending Tree: Calculating Equity