You’ve probably heard that many homeowners today are sitting on significant equity. But what does that actually mean for you?
Home equity isn’t just a figure on paper—it’s a valuable financial tool that can help you move forward with your goals.
How Much Equity Do Homeowners Have?
Equity is the portion of your home you truly own. As you pay down your mortgage and property values increase over time, your ownership stake grows.
Recent data from the Census and ATTOM shows that about two-thirds of homeowners have built substantial equity:
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39% own their homes outright, with no mortgage at all.
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27% have at least 50% equity.
That’s impressive. And in real terms, Cotality reports that the average homeowner now has nearly $300,000 in equity. Whether you have more, less, or somewhere in between, that equity can open meaningful opportunities.
How You Might Use Your Home Equity
1. Buy a Home That Better Suits Your Needs
Life changes—and your home should keep up. Maybe you need more space, or perhaps you’re ready to downsize. Your equity can serve as a substantial down payment on your next home. In some cases, it may even be enough to purchase your next property outright.2. Improve the Home You’re In
If moving isn’t on your radar, consider reinvesting in your current space. Strategic updates—like renovating a kitchen or modernizing bathrooms—can enhance your enjoyment now and potentially boost resale value later. Before starting, consult a real estate professional to focus on improvements that offer the strongest return.3. Support Major Financial Goals
Home equity can help you fund big ambitions, such as launching a business, preparing for retirement, paying education expenses, or assisting a loved one with a home purchase. For many homeowners, equity represents a powerful source of financial flexibility.4. Provide a Safety Net During Hard Times
If you encounter financial challenges, your equity can offer options. Rather than facing foreclosure, some homeowners choose to sell and walk away with funds in hand. If this situation applies to you, speaking with a real estate expert can help you understand your choices.
What to Do Next
If you’re considering tapping into your equity:
Step 1: Connect with a local real estate agent to get a personalized estimate of your home’s current value and your equity position.
Step 2: Meet with a financial advisor to explore the best strategy for your situation.Keep in mind that maintaining a healthy loan-to-value (LTV) ratio is important. A common rule of thumb is to retain at least 20% equity as a financial cushion—something many homeowners learned the hard way during the 2008 housing crash.
The good news? Data from Intercontinental Exchange indicates that most homeowners today still maintain well above that 20% threshold, with trillions in “tappable” equity available while preserving a solid financial buffer.
Bottom Line
Your home equity may be one of your most valuable assets. Whether you’re planning a move, making upgrades, or pursuing a major goal, it’s worth exploring how this resource can support your plans. A conversation with a financial advisor can help you determine the best path forward.
If funding weren’t a concern, what goal would you pursue right now?