Estimate how much cash you can borrow against your home's value.
Total Home Equity:$0
Maximum Borrowing Limit (at LTV cap):$0
Available Loan Amount:$0
How to Calculate Your Home Equity Loan Potential
A Home Equity Loan, often referred to as a second mortgage, allows you to borrow a lump sum of money using the equity in your home as collateral. Equity is the difference between what your home is worth and what you still owe on your mortgage.
Lenders typically do not allow you to borrow 100% of your home's value. Instead, they use a Loan-to-Value (LTV) ratio. Most lenders limit your combined loan-to-value (CLTV) to 80% or 85%.
The Formula Used by Lenders
To determine your borrowing power, we use the following calculation:
(Current Market Value × Max LTV %) – Current Mortgage Balance = Maximum Loan Amount
Example Calculation
Let's say your home is appraised at $500,000 and you owe $300,000 on your current mortgage. If your lender allows an 80% LTV:
80% of $500,000 = $400,000
$400,000 – $300,000 (Current Balance) = $100,000
In this scenario, you could potentially borrow up to $100,000.
Key Factors Influencing Your Loan
Credit Score: Higher scores often unlock higher LTV limits and lower interest rates.
Debt-to-Income (DTI) Ratio: Lenders look at your monthly income versus your monthly debt obligations to ensure you can afford the new payment.
Appraisal: A professional appraisal will be required to verify the actual market value of the property.
function calculateEquity() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var ltvLimit = parseFloat(document.getElementById('ltvLimit').value);
var desiredLoan = parseFloat(document.getElementById('desiredLoan').value) || 0;
if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(ltvLimit)) {
alert("Please enter valid numbers for home value, mortgage balance, and LTV limit.");
return;
}
var totalEquity = homeValue – mortgageBalance;
var maxAllowableDebt = homeValue * (ltvLimit / 100);
var availableBorrowing = maxAllowableDebt – mortgageBalance;
if (availableBorrowing availableBorrowing) {
message = "Warning: Your desired loan of $" + desiredLoan.toLocaleString() + " exceeds the estimated available equity based on your LTV limit.";
} else if (availableBorrowing > 0) {
message = "Based on an " + ltvLimit + "% LTV, you likely qualify for your desired loan amount.";
} else {
message = "It appears your current mortgage balance is higher than the allowable LTV limit.";
}
document.getElementById('logicMessage').innerText = message;
document.getElementById('equityResult').style.display = 'block';
}