Equity is what you own
Your home equity is your home’s value minus what you still owe on it. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. You can’t usually borrow all of it: lenders keep a share of the value uncovered as a cushion.
How the borrowing limit works
Lenders cap how much you can owe in total against your home, counting your current mortgage and the new loan together. The cap depends on the loan type and its purpose, so ask your loan consultant for yours. The basic math is:
- Home value × the lender’s limit = the most you can owe in total
- Minus what you owe now = what you may be able to borrow
Equity at common home values
Illustrative examples of equity, before any lender limit is applied:
| Home value | Owe half | Equity | Owe 70% | Equity |
|---|---|---|---|---|
| $300,000 | $150,000 | $150,000 | $210,000 | $90,000 |
| $400,000 | $200,000 | $200,000 | $280,000 | $120,000 |
| $500,000 | $250,000 | $250,000 | $350,000 | $150,000 |
| $600,000 | $300,000 | $300,000 | $420,000 | $180,000 |
| $750,000 | $375,000 | $375,000 | $525,000 | $225,000 |
| $1,000,000 | $500,000 | $500,000 | $700,000 | $300,000 |
The amount you can borrow will be less than the equity shown, because of the lender’s limit.
What else affects how much you can borrow
- Your credit score and debt-to-income ratio
- Your home’s current value, often confirmed with an automated valuation
- The property type and whether it’s your primary residence or a second home
CapCenter home equity loans
CapCenter home equity loans run from $50,000 to $250,000, with fixed rates and ZERO Closing Costs (restrictions apply; see Offer details). They are available on single-family primary residences and second homes, and an appraisal is not required in most cases. We don’t offer HELOCs.
Home equity loan or cash-out refinance?
A home equity loan keeps your current mortgage and adds a second payment. A cash-out refinance replaces your mortgage with a new, larger one. If your current rate is low, a home equity loan often lets you keep it.
