How Much Equity Do I Have in My Home? Value Minus Balance, Worked Through

The short answer

Equity is what your home is worth today minus what you still owe on it. Neither number is on a statement you own, but both can be estimated from figures you do have: what you paid and when, and the loan you took to buy. The value side scales your purchase price by how your area’s FHFA house price index changed since then. The balance side runs your loan through the amortization schedule every fixed-rate mortgage follows. Subtract, and you have a checkable estimate, with every input visible.

Step one: what the home is worth

Value today = purchase price × (index now ÷ index at purchase)

The index is the FHFA House Price Index, which measures average price changes in repeat sales and refinancings of the same homes. The smallest area with data gives the most specific answer: ZIP code, then county, then metro, then state. The county and ZIP series are annual and FHFA labels them developmental; the state and metro series are quarterly. The full method, and why the levels disagree, is in the index method, step by step.

Step two: what you still owe

A fixed-rate mortgage is paid off on a fixed schedule, so the balance at any month is a formula, not a mystery. With L the loan amount, r the annual rate divided by twelve and n the term in months, the monthly payment is:

P = L × r ÷ (1 − (1 + r)⁻ⁿ)

And the balance after k payments is:

Balance = L × (1 + r)^k − P × ((1 + r)^k − 1) ÷ r

This is the amortization schedule the Consumer Financial Protection Bureau describes: early payments are mostly interest, later ones mostly principal. The loan amount is the price minus your down payment. The first payment is due the month after closing, so k is the number of months from your purchase month to now. Only principal reduces the balance; interest, taxes, insurance and mortgage insurance never do.

A worked example

You bought in March 2014 for $310,000 in ZIP 78704, in Austin, Texas, with $62,000 down and a 30-year fixed loan of $248,000 at 4.50%.

The value

1. FHFA’s annual index for ZIP 78704 was 1529.73 in 2014 and 2984.51 in 2025, the latest published.
2. 2984.51 ÷ 1529.73 = 1.95, a change of +95.1%.
3. $310,000 × 1.95 = $604,811.

The balance

1. The payment on $248,000 at 4.50% over 360 months is $1,257 a month, principal and interest.
2. From March 2014 through September 2026, 150 payments were due.
3. After 150 payments the balance is $182,405. Those payments retired $65,595 of principal.

The equity

$604,811 − $182,405 = $422,407, about 70% of the home’s estimated value.

Where the equity came from

The same figure splits into three parts, and the split matters more than the total.

• Down payment: $62,000. Yours from the day you closed.
• Appreciation: $294,811. The ZIP index change applied to the purchase price (2014 to 2025). This part depends on the market and can shrink.
• Principal paid: $65,595. Money sent to the lender that reduced the balance. This part does not go away if prices fall.

$62,000 + $294,811 + $65,595 = $422,407. In this example appreciation is 70% of the equity, which is a plain way of saying how much of it rests on the area’s prices staying where the index last saw them.

The home equity since purchase calculator runs both steps for any purchase and loan, prints the index values and the balance math, and shows the same three-way split.

When the balance side is wrong

The formula gives the on-schedule balance of one fixed-rate loan. It is wrong, sometimes by a lot, if you refinanced, made extra payments, took a second mortgage or a HELOC, have an adjustable rate, or missed payments. If you refinanced, use the refinance loan’s amount, rate, term and start month for the balance and keep the original purchase for the value. In every case your lender’s most recent statement has the real balance, and subtracting it from the value estimate is the better calculation.

What this method cannot know

• Your house. The value tracks the area’s average. Renovations, condition, lot and the street are invisible to it.
• Sales the index never sees. The FHFA index is built from mortgages bought or guaranteed by Fannie Mae and Freddie Mac, so cash, jumbo, FHA and VA purchases are not in it (FHFA HPI FAQ).
• Selling costs. Commissions, transfer taxes and repairs come out before you see cash. Equity is not net proceeds.
• What a lender will count. Lenders use their own appraisal and their own limits on borrowing against a home. This is an estimate, not an appraisal and not an offer of credit.

Sources

• FHFA House Price Index datasets, the annual 5-digit ZIP file used for the value.
• FHFA HPI frequently asked questions, on what the index includes and the developmental label.
• CFPB: What is amortization and how could it affect my mortgage?, the schedule behind the balance.

This guide is for informational purposes only. It is not an appraisal, and not financial, tax, lending or real-estate advice. Every estimate on this site tracks an area’s average, never a particular house. Confirm anything that matters with a licensed appraiser or your lender.

Last reviewed: September 2026 · Against the FHFA House Price Index (annual ZIP file dated March 31, 2026) and the standard fixed-rate amortization formula.