Home Equity in San Diego: What It Is and How a HELOC or Home Equity Loan Works

by Trevor Landress

Home equity is your home's value minus what you owe on your mortgage, and you can borrow against it with a home equity loan or a home equity line of credit, called a HELOC. Either one is a second mortgage that you pay in addition to your first, which means the home is the collateral.

The short answer

Equity equals the home's value minus your mortgage balance.
A home equity loan is a lump sum. A HELOC is a credit line you can draw on repeatedly.
HELOCs usually have adjustable rates, so the payment can change even if you borrow no more.
Selling a home generally requires paying off a HELOC right away.

How to figure out your equity

The Consumer Financial Protection Bureau defines equity as your home's value minus what you owe on your mortgage. The balance is on your latest mortgage statement. The value is the harder number, because it is an estimate until a buyer, or an appraiser, tests it.

As an example, if a home is worth $1,000,000 and the mortgage balance is $600,000, the equity is $400,000. That is an illustration, not a forecast for your home. My guide to how much your home is worth covers four ways to get a value, and it is the right place to start before you talk to a lender.

Home equity loan or HELOC

Feature	Home equity loan	HELOC
How you get the money	A specific amount, as a lump sum	A credit line you can draw on multiple times up to a maximum
Rate	May be fixed or adjustable	Usually adjustable
Payment	Set by the loan terms	Varies with your outstanding balance
If you already have a mortgage	A second mortgage you pay in addition to the first	A second mortgage you pay in addition to the first

The CFPB page was last reviewed in August 2026. A HELOC works somewhat like a credit card, because repayments restore your available credit.

The draw period and the repayment period

The CFPB's HELOC booklet (last updated in August 2022) explains that a HELOC usually has two stages. During the draw period you can borrow up to your credit limit, often with special checks or a card. Some plans require principal and interest payments in that period, and others allow interest-only payments, so the principal does not go down.

The repayment period begins when the draw period ends. The lender may set a schedule to repay over about 10 to 15 years, or may require a single balloon payment of the full balance. The booklet says that falling behind, or being unable to pay a balloon payment, could cost you your home.

What to compare before you borrow

The rate: variable rates are built from an index plus a margin, and some lenders offer a temporary low introductory rate.
Rate caps and floors, and whether you can convert part of the balance to a fixed rate.
Up-front costs: an appraisal, an application fee that may not be refunded if you are denied, and closing costs.
Other fees: points, annual fees, transaction fees, inactivity fees and prepayment penalties.
How the credit limit is set: typically a set percentage of your equity.

The booklet suggests getting estimates from three lenders and comparing the costs and features. It also notes that lenders can freeze or reduce your credit line if your home's value drops or your finances worsen, and that renting out the home may be prohibited under the line's terms.

Equity and selling your home

The booklet says selling your home generally requires you to pay off a HELOC right away. That payoff comes out of your sale proceeds, so it belongs in your estimate. I show how the other costs add up in my net proceeds guide and my guide to the cost of selling.

Equity can also fund the next purchase. If you sell and buy again, the first thing a new lender will ask about is your income and the debt you carry, which I cover in my debt-to-income guide. Before you tour homes, read what to know about written buyer agreements.

Protecting your proceeds

When a sale closes, the money moves by wire, and scammers target those wires as well as buyers' down payments. I explain the steps in my wire fraud guide. Verify any payoff or wiring instructions by calling a number you already trust.

I am not a lender, and I cannot tell you whether a HELOC is right for you. A housing counselor can help, and the CFPB says counselors are often free or low cost.

My advice for San Diego homeowners

Get a realistic value for your home before you ask a lender how much you can borrow.
Ask for the rate type, the caps, the fees and the draw and repayment periods in writing.
Compare estimates from three lenders, not just the first one you call.
Plan for the payoff of any HELOC if you may sell within a few years.
Talk to a HUD-approved housing counselor if you are struggling with your mortgage before you borrow more.

A note on advice

I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.

Call or text me at (619) 402-4614 or send me a message.

Call or text (619) 402-4614 Contact Trevor Landress

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Frequently asked questions

How do I calculate my home equity?

Equity is your home's value minus what you owe on your mortgage. For example, a $1,000,000 home with a $600,000 balance has $400,000 in equity.

What is the difference between a home equity loan and a HELOC?

A home equity loan is a lump sum, and the rate may be fixed or adjustable. A HELOC is a credit line you can draw on repeatedly, and it usually has an adjustable rate.

Is a HELOC a second mortgage?

Yes. If you already have a mortgage, a home equity loan or a HELOC is a second mortgage that you pay in addition to your first.

What happens to a HELOC if I sell my home?

According to the CFPB, selling your home generally requires paying off the HELOC right away.

Can a lender freeze my HELOC?

Yes. The CFPB says lenders can freeze or reduce your credit line if your home's value drops or your finances worsen.

About the author

Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.

Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.

He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.

Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.

How I help San Diego home buyers

I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.

How I help San Diego home sellers

I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.