How home equity works when you sell
Equity is the share of your home you own outright. It grows two ways: as you pay down your loan, and as the home’s value changes. It matters most at the moment you sell, because that is when it turns into cash, minus the costs of the sale. This calculator shows today’s equity and projects how it might change over time under assumptions you control.
The formula
- Current equity= Current home value − mortgage balance
- Projected value= Current value × (1 + appreciation rate)years
- Projected balance = Current balance reduced by about 2% of that balance per year, never below zero
- Projected equity= Projected value − projected balance
The paydown step is a simplification. Real loans amortize on a schedule set by the rate and term, with more interest early and more principal later, so treat the projection as a rough guide and your loan statement as the real record.
What each input means
Current home value. What the home would likely sell for today. A tax assessment is not the same thing as market value, and recent comparable sales nearby are a better reference point.
Mortgage balance. Everything you owe that is secured by the home. If you have a second mortgage or home equity line, add its balance, because it must be paid off at closing too.
Annual appreciation rate. The yearly change in value you want to model. Nobody can forecast it. The FHFA House Price Index is a repeat-sales index that tracks historical price changes for the nation, states and metro areas (as of September 2026). History is context, not a prediction, so run a few scenarios, including a flat or falling market.
Years to project. How far ahead to run the model. A longer horizon makes the projection more sensitive to the rate you chose.
From equity to proceeds
Equity is not the check you receive. When you sell, the settlement statement subtracts the listing commission or fee, the deed taxes, title and settlement charges, and any repairs or credits you agree to before the balance is paid to you. That is why two sellers with the same equity can walk away with different amounts.
The fee is often the largest of those costs, and it is the one line that depends on how you sell. VroomBrick charges a 1% technology fee for the platform, paid by you at closing, from the sale proceeds. You don’t pay a listing agent commission. On the stated price we use in all of our materials:
Worked example
On a $400,000 home, a 1% technology fee is $4,000. If a seller's agent charged 3%, that would be $12,000, a difference of $8,000. Commissions are negotiable, so your number depends on what you'd have paid.
To run every selling cost against your own numbers, use the seller net proceeds calculator. For just the fee comparison at a commission rate you enter, use the agent commission cost calculator.
Tax on the gain
Tax is figured on gain, not equity. According to IRS Publication 523, you subtract your adjusted basis from the amount realized to find the gain, and owners who meet the ownership and use tests (generally owning and living in the home for at least 24 months of the previous five years) may exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly (as of September 2026). How those rules apply to you is a question for a tax professional.
When selling on a timeline
Military families who receive orders, and anyone relocating, often need to know their equity quickly. VroomBrick is a technology platform, not a brokerage. Sellers get a licensed closing attorney, showing agents, a transaction dashboard, and remote closing and power-of-attorney support, so a sale can move forward even if you have already left the area. This calculator is an educational estimate and not financial, tax or legal advice.