Equity
The portion of your home you truly own — its market value minus the balance of all loans secured by it. Equity grows as you pay down principal and as the home appreciates.
What does equity mean?
Equity is the slice of your home you actually own, and it grows two ways: every amortizing payment chips at the principal, and any rise in market value adds to it on top. You can borrow against it with a home-equity loan or HELOC, draw on it in retirement with a reverse mortgage, or cash some out in a refinance. It is also what you walk away with when you sell.
Frequently asked
How do I build home equity faster?
Pay extra toward principal, switch to biweekly payments, or put more down at purchase — each shrinks the balance sooner. Market appreciation adds to equity on top, though you do not control that. Avoiding cash-out refinances keeps the equity you have built intact.
How can I use my home equity?
You can borrow against it with a home-equity loan or HELOC, pull some out in a cash-out refinance, or — at 62 and older — draw on it with a reverse mortgage. You also collect it as cash when you sell.
Put it to use
Home Equity Loan Calculator
Calculate the fixed monthly payment and total interest on a lump-sum home-equity loan.
Down Payment Calculator
Turn a down-payment percentage into dollars and see whether you clear the 20% PMI threshold.
HELOC Calculator
Estimate your available home-equity line of credit and the draw and repayment payments.
Related terms
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