Negative Equity Loan Calculator

Use our negative equity loan calculator to determine your home loan situation. Calculate your negative equity, potential refinancing options, and next steps.

What is Negative Equity?

Negative equity occurs when the value of your home is less than the amount you owe on your mortgage. This situation typically arises when property values decline, often due to economic downturns, changes in neighborhood appeal, or natural disasters.

Key Point

Negative equity doesn't mean you own your home for free - you still owe the bank the full mortgage amount, even if your home is worth less.

The financial impact of negative equity can be significant. While you may not owe any money to the bank, you're still responsible for the full mortgage balance. This can affect your ability to sell your home, refinance, or even move to a new property.

Common Causes

Declining property values in your neighborhood
Economic downturns that reduce home values
Natural disasters that damage property values
Changes in neighborhood appeal or safety

How to Calculate Negative Equity

The negative equity amount is calculated by subtracting the current value of your home from the remaining mortgage balance. Here's the formula:

Negative Equity Formula

Negative Equity = Remaining Mortgage Balance - Current Home Value

For example, if your home is worth $150,000 but you still owe $180,000 on your mortgage, your negative equity would be $30,000.

Example Calculation

Description	Amount
Current Home Value	$150,000
Remaining Mortgage Balance	$180,000
Negative Equity	$30,000

Our negative equity loan calculator makes this calculation quick and easy. Simply enter your home value and remaining mortgage balance to see your negative equity amount.

Negative Equity Loan Options

When you're in negative equity, you have several options to address the situation:

1. Short Sale

A short sale occurs when you sell your home for less than what you owe on the mortgage. The bank typically accepts less than the full amount owed, which can help you avoid foreclosure.

2. Deed-in-Lieu of Foreclosure

This option allows you to transfer ownership of your home to the bank in exchange for releasing your mortgage debt. You'll receive a discharge of your debt but won't own the property.

3. Refinancing

If your home value has increased, you may be able to refinance your mortgage to reduce your debt. This can help you eliminate negative equity over time.

4. Renting Out Your Home

If your home is worth less than your mortgage but you still want to stay in the property, consider renting it out. The rental income can help cover mortgage payments.

Important Note

Consult with a financial advisor or mortgage professional before making any decisions about negative equity. Each situation is unique and requires careful consideration.

FAQ

Is negative equity the same as being underwater on your mortgage?: Yes, these terms are often used interchangeably to describe the situation where your home is worth less than what you owe on your mortgage.
Can I still get a mortgage if I have negative equity on my current home?: It can be challenging, but some lenders may consider your negative equity when evaluating your creditworthiness. You may need to demonstrate strong income and savings to qualify.
Will negative equity affect my credit score?: Negative equity itself won't directly impact your credit score, but the actions you take (like missed payments or foreclosure) can negatively affect your credit.
Can I sell my home if I have negative equity?: Yes, you can sell your home even with negative equity. The sale price will be less than what you owe, and you'll need to work with your lender to resolve the difference.
Is negative equity a good reason to move?: Moving may be a good option if you're struggling with the financial burden of negative equity. Consider your long-term goals and financial situation before making a decision.