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Home equity: what it means

Home equity (or equity) is what your home is worth today minus what you still owe on the mortgages on it. You can borrow against that equity: with a home equity loan, which you receive as a lump sum and which usually has a fixed rate; with a HELOC; or with a cash-out refinance.

In Spanish it is

Patrimonio en la vivienda

Also written as: equity

Verified on October 17, 2026

3 official sources

See the whole dictionary

The full explanation

In all of these the home is the collateral and, if you do not repay, the lender could take it. With a reverse mortgage, the balance grows each month and your equity goes down.

An example

Ten years after buying, Beatriz owes much less and her home is worth more. Her equity has grown, but before borrowing against it she thinks hard about whether she can repay a new loan.

You will see it in…

Home equity loan and HELOC offers
The appraisal and your statement, which together show your equity
Our rent-vs-buy calculator

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

More guides that use “home equity”

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

1. CFPB · Mortgages key terms: equity (external site) · in English · Verified on October 17, 2026
2. CFPB · What is a home equity loan? (external site) · in English · Verified on October 17, 2026
3. CFPB · What is a reverse mortgage? (external site) · in English · Verified on October 17, 2026