Last updated: November 2025
Quick Answer
Home equity counts in your net worth when calculating the value of your owned assets minus liabilities. It reflects the portion of your home you truly own and can leverage or borrow against. It is considered a part of your net worth in most financial planning scenarios, especially if the home has market value and equity can be tapped through refinancing or a HELOC.
What is net worth?
Net worth is a snapshot of your financial health. It’s calculated by subtracting your total liabilities from your total assets. Assets include:
- Bank accounts and investments
- Retirement accounts
- Vehicles and property
- Real estate, including your home
Liabilities include:
- Mortgages
- Auto loans
- Credit card debt
- Student loans
When you calculate your net worth, your home equity appears as an asset. Specifically, it’s the portion of your home’s value that you own outright after subtracting what you owe on your mortgage.
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Does home equity increase net worth?
Home equity is the difference between your property’s current market value and your outstanding mortgage balance. If your home is worth $500,000 and you owe $300,000, your equity is $200,000. That $200,000 is part of your net worth.
Here’s how it looks on a basic net worth statement:
| Asset | Value |
| Home value | $500,000 |
| 401(k) retirement account | $100,000 |
| Savings account | $20,000 |
| Total assets | $620,000 |
| Liability | Amount |
| Mortgage balance | $300,000 |
| Credit card debt | $5,000 |
| Auto loan | $15,000 |
| Total liabilities | $320,000 |
Net worth = $620,000 − $320,000 = $300,000
In this case, home equity contributes $200,000 to the $300,000 net worth.
Read more: What is a HELOC?
When home equity may not fully count
There are scenarios where home equity plays a smaller or more nuanced role in net worth discussions:
- Low market liquidity: If you’re in a market downturn or your home is hard to sell, equity may be less “accessible” in practical terms
- HELOC or second mortgage use: If you’ve borrowed against equity, it reduces your net ownership
- Inflated appraisals: Overestimating home value inflates your net worth inaccurately
In strict accounting terms, home equity always contributes to net worth. But in financial planning or investment strategy, the liquidity and borrowability of that equity may affect its relevance.
Is home equity an asset?
No. Home equity is not liquid. You can’t withdraw it instantly like a savings account; it requires a financial action, like:
- Selling your home
- Taking out a home equity line of credit (HELOC)
- Refinancing your mortgage
That said, home equity is still a valuable asset. It becomes more usable through products like HELOCs that turn it into accessible funds for major expenses, debt consolidation, or home renovations.
Read more: How does a HELOC work?
How to determine the value of your home equity
To accurately factor your home equity into your net worth, follow these steps:
- Get an accurate home value
- Use recent sales in your neighborhood
- Request a professional appraisal
- Check online home valuation tools (Zillow, Redfin, etc.).
- Check your mortgage payoff amount
- Don’t just use your monthly statement—request a payoff quote
- Subtract your mortgage balance from your home’s value
- Example: $450,000 home – $270,000 mortgage = $180,000 equity
Read more: Use our HELOC calculator.
Primary residence vs. investment property in net worth
Both types of properties contribute to your net worth, but they serve different financial roles.
| Feature | Primary Residence | Investment Property |
| Purpose | Place of residence | Rental income and appreciation |
| Equity use | HELOC, cash-out refi | Rental leverage, tax deductions |
| Net worth impact | Equity only | Equity + potential income stream |
Real estate investors often view net worth through both equity and income-generating potential. For homeowners, the primary residence counts as equity but may not generate income.
Learn: How to apply for a HELOC.
Home equity can be your best financial planning tool
Home equity impacts many areas of your financial strategy:
- Borrowing power: More equity = easier HELOC approval
- Retirement planning: Downsizing or reverse mortgage options
- Debt consolidation: Use equity to pay off high-interest debt
- Emergency funding: Tap equity during financial setbacks
If your goal is long-term wealth building, tracking and growing home equity is essential. It’s one of the few appreciating assets that can also support borrowing.
Estimate your HELOC potential: See how much equity you could access with HomeEQ.
FAQ: When does home equity count in your net worth?
Q: Does home equity always count toward net worth?
A: Yes. Equity is a core part of your total assets in net worth calculations. However, its liquidity affects its usefulness for short-term planning.
Q: Can I count my full home value in my net worth?
A: No. Only the portion you own outright (home value minus mortgage) is considered equity and included in net worth.
Q: Should I use an online estimator to calculate home equity?
A: Online tools can provide a general idea, but they’re not always accurate. For financial planning or loan applications, use a formal appraisal.
Q: Can I borrow against my home equity without selling my house?
A: Yes. A home equity line of credit (HELOC) or a cash-out refinance allows you to access your equity while keeping your home.
Q: What happens to my net worth if the housing market declines?
A: If your home’s value drops, your equity (and thus your net worth) also decreases. This is why real-time appraisals are important.
