How Much Equity Can I Borrow From My Home?

As a homeowner, your home equity represents one of your most valuable financial assets. It’s the difference between what you owe on your mortgage and what your home is worth today. With home values growing by nearly 50% in the past four years, you may be asking, “How much equity can I borrow from my home?”

In this post, we review your options for tapping into your home equity and how to estimate the maximum amount you can borrow.

We’ll also share factors that increase the amount you can access, and provide some interesting survey data about how Americans are using their equity loans.

Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight encourages you to reach out to an advisor.

What equity borrowing options do I have?

There are three common ways homeowners can access money from their home equity:

Home equity loans: A home equity loan gives you a lump sum of cash upfront, which you repay over time with fixed monthly payments. It’s often used for large, one-time expenses like home renovations or debt consolidation.
Home equity line of credit (HELOC): A HELOC acts like a credit card secured by your home. You can borrow money as needed during a set draw period, and you only pay interest on what you use. It’s a flexible option for ongoing expenses or projects.
Cash-out refinancing: With cash-out refinancing, you replace your current mortgage with a new one that’s larger than what you owe. The difference is paid to you in cash. This option might be useful for homeowners who want to take advantage of lower interest rates while accessing their equity.

How do I estimate my home equity?

Estimating your home equity is fairly straightforward. To get an estimate:

1. Find your home’s current market value: You can do this by looking at recent sales of similar homes in your area, using online tools like HomeLight’s Home Value Estimator, or getting a professional appraisal.

2. Subtract your outstanding mortgage balance: Check your most recent mortgage statement to find out how much you still owe.

The difference between your home’s value and your mortgage balance is your available equity.

How much equity can I borrow from my home?

The amount of equity you can borrow depends on the type of loan you choose, your credit score, and the lender’s terms. Most lenders allow homeowners to borrow up to 80% to 85% of their home’s value, minus what they still owe on their mortgage. Some lenders may allow up to 90%

Here are three real-world examples using a U.S. median home value of $420,000 with an outstanding mortgage balance is $280,000:

Home equity loan: If your lender allows you to borrow 80% of your home’s value, you could borrow up to $100,000 in a home equity loan if you have $140,000 in existing equity.
HELOC: Suppose you need a smaller loan, like $30,000, for home improvements. A HELOC would let you borrow that amount and only pay interest on what you use during the draw period.
Cash-out refinance: You refinance your home for $336,000, cashing out $56,000 of your equity. This replaces your existing mortgage balance of $280,000, allowing you to access some of your home’s value while keeping a new mortgage in place. Many lenders

Most lending companies provide helpful online home equity and cash-out refinance calculators that make it easy to determine how much you can borrow against your home.