Home equity is the part of your property you actually own. While you do “own” your home, your mortgage lender has interest in the property until it’s paid off. To calculate your home’s equity, subtract your outstanding loan balance from the current market value of your property.

Home equity will increase as you pay down your loan or the market value of your home increases. Home equity is the value of a homeowner’s interest in their home. Simply subtract how much you owe on your mortgage from the fair market value of your home.