Quick answer
Home equity is your home’s market value minus what you owe on loans secured by it. You can borrow against it with a home equity loan (a lump sum, often at a fixed rate), a HELOC (a revolving line, often at a variable rate) or a cash-out refinance (a new, larger first mortgage). All three use your home as collateral.
Home equity is the difference between your home's current market value and the outstanding balance of loans secured by the property.
For example, if your home is worth $450,000 and your outstanding mortgage balance is $280,000, your estimated equity is $170,000 before considering selling costs or other liens.
Your available borrowing amount, if any, may be lower than your estimated equity because lenders consider eligibility, loan-to-value limits, credit, income, and other factors.
Estimate your own equityA home equity loan generally provides a lump sum with a repayment schedule. Depending on the product, the interest rate may be fixed, which can make payments more predictable.
This option may be worth exploring if you need a defined amount for a specific expense.
A HELOC generally provides access to a revolving credit line secured by your home. You may be able to borrow funds as needed, subject to the terms of the agreement.
Many HELOCs have variable interest rates, so payments and borrowing costs may change.
A cash-out refinance replaces your existing mortgage with a new mortgage. If approved, the new loan may provide funds beyond the amount needed to pay off your existing mortgage and eligible costs.
Consider the new interest rate, closing costs, repayment term, and effect on your existing mortgage before choosing this option.
The right path depends on what you need, how you prefer to borrow, the terms available, and your overall financial situation.
Consider whether you need a lump sum or ongoing access to funds, whether you want to replace your current mortgage, and how the additional debt would affect your budget.
Plain-language definitions of the terms that come up most when you compare mortgage options.
Start by reviewing your estimated home value, outstanding mortgage balance, and financial goals. Then explore the available options and their costs.
All home equity products are subject to availability, lender requirements, and approval. This page provides general educational information and does not guarantee eligibility or access to funds.