Equity
Direct definition
The portion of a property you truly own — the value minus what you still owe.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Equity grows through principal payments, appreciation, and improvements. It can be tapped through cash-out refinancing, HELOCs, or home equity loans.
Why it matters
Equity is often the largest single component of household wealth.
Where you may see it
- Closing Disclosure
- Mortgage statement
- Appraisal report
A real-world example
Your home is worth $600,000 with a $350,000 balance — you have $250,000 of equity.
Educational and illustrative only
A common misunderstanding
Equity is not cash sitting in an account — it's a calculated value that must be accessed through selling, refinancing, or borrowing against the home.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026