How to Calculate Equity in Your Home to Purchase Another House

Whether you are selling your home or plan to apply for a second mortgage to finance the purchase of another home, you must know the amount of equity you have available in your present home. Typically, lenders require that you place a minimum of 20 percent of a home's sale price as a down payment for its purchase. However, some lenders will finance a house for a smaller down payment depending on your credit score.

Contact your lender to determine your mortgage's payoff amount. Your most recent mortgage statement might also provide this information.

Call your real estate agent or lender and ask for an appraisal of your home. If you have a purchase offer on your home, you can use the sale price on the offer.

Subtract your payoff amount from the sale price or appraised value of your home. For example, if the value of your home is $150,000, and your payoff amount is $50,000, your equity is $100,000.


  • MSN Money provides a home equity calculator that will help you calculate the amount of equity a bank might allow you to borrow.


  • The interest on a home equity loan can be higher than the interest on a traditional mortgage. If you owe more on your home than you can sell it for, you have negative equity and cannot use your current home to purchase another house.