U.S. Mortgage Index

Equity

Also called Home equity

Definition

Equity is the owner’s interest in a property after subtracting the mortgage and other liens secured by it. Home equity is the same idea in everyday language.

In plain English

If a home is worth more than the debts against it, the difference is equity. Paying down principal or a change in value can move that figure, but this page does not appraise property or predict prices. Home-equity loans and HELOCs borrow against that interest. They are products. Equity is the interest itself.

Technical definition

Consumer glossaries treat equity as the value remaining after subtracting liens. It is not a cash account and not a second-mortgage product.

Why it matters

Refinance, cash-out, and home-equity product pages assume readers can tell ownership interest from a new loan against that interest.

Example

Sam’s home has a current market value and a remaining first-mortgage balance. The difference is equity. Taking a home-equity loan would create a new debt against that interest; it would not rename the interest.

Sources reviewed