Boneyard Tools

Home equity, LTV and how much you can borrow

How equity, loan to value and combined loan to value relate, how lenders set a borrowing base, and why the value in the formula is only an estimate.

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Equity, LTV and equity percentage

These three numbers describe the same position from different angles. Equity is the dollar cushion between what the home is worth and what you owe. Loan to value expresses the debt as a share of the value, so a smaller LTV means a larger cushion. Equity percentage is simply the mirror of LTV, since equity percentage and LTV always add up to 100 percent for a single loan. On a 400,000 home with a 250,000 balance, LTV is 62.5 percent and equity percentage is 37.5 percent, and the two sum to 100.

Combined loan to value

Most lenders that offer a home equity loan or line of credit care about combined loan to value, or CLTV, not just the first mortgage. CLTV adds every balance secured by the home and divides by the value. If a first mortgage of 250,000 and a HELOC of 40,000 sit on a 400,000 home, the CLTV is 290,000 divided by 400,000, or 72.5 percent. This single field tool computes LTV for whatever balance you enter, so to model CLTV you add the balances yourself and enter the total.

How lenders set a borrowing base

Lenders rarely let you borrow against all of your equity. They set a maximum CLTV, often around 80 to 90 percent, and your borrowing base is that ceiling times the value, minus the balances already secured. On the 400,000 home with a 250,000 first mortgage and an 85 percent cap, the base is 0.85 times 400,000 minus 250,000, which is 90,000. This calculator does not perform that step, but it gives the equity and LTV inputs you need to estimate it, and the real limit still depends on your credit, income and the lender's rules.

The value is an estimate, not a guarantee

Every figure here rests on the market value you type in, and that value is uncertain until a sale closes. Appraisals, comparable sales and online estimates can disagree by tens of thousands of dollars. Because equity, LTV and equity percentage all scale with that value, a modest change in your estimate moves every result. Treat the output as a planning snapshot rather than a promise, and refresh it when you get a new appraisal or when local prices move.

Frequently asked questions

Do equity percentage and LTV always add to 100?

For a single loan, yes. Equity percentage is equity over value and LTV is balance over value, and equity plus balance equals value, so the two percentages sum to 100. With extra liens you would track CLTV instead.

How do I estimate my HELOC headroom with this tool?

Read your current LTV, then take a lender's maximum CLTV, say 85 percent, subtract your LTV from it, and multiply that gap by the market value. That approximates the additional amount you could borrow, before credit and income checks.

Is this financial advice?

No. It reports the arithmetic of equity, LTV and equity percentage from the numbers you enter. It does not account for your credit, income, fees or a lender's specific rules, so use it for planning and confirm real figures with a lender.