The short answer
Home equity = market value of the home − mortgage and other loans secured on it
The Federal Reserve’s Survey of Consumer Finances counts the home as an asset and home-secured loans (mortgages, home equity loans and home equity lines of credit) as debts. In its 2025 report it describes the difference as net housing value. Among homeowners, the median net housing value was 230,000 dollars, up from 218,900 in 2022 after adjusting for inflation, and the mean was 380,400. About 66% of U.S. families owned their home.
Three ways to enter a home
| Method | Assets entered | Debts entered | Net worth |
|---|---|---|---|
| 1. Full value and mortgage (standard) | 460,000 | 260,000 | 200,000 |
| 2. Equity only | 210,000 | 10,000 | 200,000 |
| 3. Home excluded, mortgage excluded | 60,000 | 10,000 | 50,000 |
| Mistake: equity and mortgage | 210,000 | 260,000 | −50,000 |
Methods 1 and 2 give the same total. Method 1 is clearer because you can see both the value and the loan, and it is how our calculator works. Method 3 answers a different question: what you are worth outside your home. The last row shows the classic error: subtracting the mortgage twice.
How to value the home
- Use a realistic sale price today, such as recent sales of similar homes nearby, not the purchase price.
- Consider deducting typical selling costs if you want a more conservative figure, and note that you did.
- Use the outstanding mortgage principal from your latest statement, not the monthly payment.
- Include any home equity loan or line of credit as a separate debt.
- Keep the same valuation method each time you update the figure.
When definitions leave the home out
Some rules measure net worth without the main home. For example, under U.S. securities rules an individual can qualify as an “accredited investor” with a net worth over 1 million dollars, excluding the value of the primary residence. Under that test, the mortgage on the home is generally not counted as a debt up to the home’s market value, but any amount by which the loan exceeds the value does count, and so does certain recent extra borrowing against the home. That is a legal test with its own rules, not a better way to measure your own finances.
Leaving the home out can also be useful when you want to know how much wealth you could draw on without selling where you live. That idea is close to liquid net worth.
Why it matters for comparisons
Because homeowners hold so much of their wealth in their homes, including or excluding the home changes the picture a lot. The homeowner vs renter comparison shows how large the gap is in the Fed data. When you compare your figure with a benchmark, use the same definition as the benchmark.
Questions people ask
What if my mortgage is larger than the home’s value?
Then your equity is negative. Enter both figures as they are; the negative equity will lower your net worth.
Do I include a rental property?
Yes, at its market value with its mortgage as a debt, in the same way as your home.
Sources
- Federal Reserve Board, Changes in U.S. Family Finances from 2022 to 2025 (October 2026): homeownership rate and net housing value (Box 4).
- Investor.gov (U.S. SEC), Accredited Investors – Updated Investor Bulletin: the net worth test and how the primary residence is treated.
Educational information only, not legal, tax or personal financial advice.