Homeownership usually comes with one huge perk that can transform a household’s finances - equity.
It’s the difference between a house’s value and what’s owed on it. Over time, equity goes up as a mortgage balance comes down and the home’s value rises.
Home equity is valuable in a few ways - it increases net worth, can be a source of funding via lines of credit and loans, and can create profit when the house sells.
Americans held a record $18 trillion in home equity in August, according to data analyst Intercontinental Exchange’s August 2026 Mortgage Monitor report.
That equity is spread across consumers of all ages, with younger generations typically having less of it than older generations.
Who has the most equity?
Here’s the median home equity based on age group, according to a July 2026 analysis from the Census Bureau:
- Under 35: $83,000
- 35-44: $180,000
- 45-54: $212,000
- 55-64: $250,000
- 65-69: $264,600
- 70-74: $300,000
- 75 and over: $275,000.
By generation, here’s how median home equity looks:
- Generation Z (14-29): $56,500
- Millennial (30-45): $150,000
- Generation X (46-61): $220,000
- Baby boomer (62-80): $275,000
- Silent Generation (81 and older): $275,000.
Equity tends to level off or decline later in life because houses tend to fall into disrepair, cutting into their value, according to Boston College’s Center for Retirement Research. The house’s condition is one of many things that can impact equity levels.
And, some older homeowners may have a lot of equity but little cash to cover everyday expenses, said Kevin Leibowitz, owner of boutique mortgage firm Gratyon Mortgage, in an email to The Independent.
“If there's a lot of equity in the house and the borrowers are short on cash, then they're house rich and cash poor,” Grayton said. “Their net worth could be substantial, but they might be short on cash for day-to-day expenses.”
Equity influencers
Some of the common factors that influence home equity include, according to lender PennyMac:
- Changes in property values: As values rise, equity tends to rise because the gap between what a house is worth and what’s owed on it widens.
- Renovations and upgrades: Improving a residence can raise its value, which boosts equity.
- Buyer’s down payment amount: A bigger down payment reduces mortgage amounts and increases equity.
The opposite is also true. Equity can drop when house values drop, a house has damage or issues with its electrical or heating/cooling system, or when the down payment is smaller.
Using your equity
Homeowners can use, or “tap,” as it’s commonly called, their equity in multiple ways. Lenders provide home equity lines of credit and loans.
“HELOCs,” as they’re usually called, work sort of like a credit card - you can use it when you wish, up to your limit, and are responsible for paying back what you borrow.
HELOCs usually have a draw and repayment period. Borrowers can use the line of credit during the draw period, then must repay what they withdrew during the repayment period.
Home equity loans work like traditional loans - lenders approve a borrowing amount based on a property’s equity, the money is disbursed all at once, and repayment begins immediately via fixed payments for up to 30 years.
In both cases, borrowers should understand that HELOCs and home equity loans can put your house at risk of foreclosure.
“If you do this, you’re using your home as collateral to borrow money,” the Federal Trade Commission warned in a September 2025 overview of home equity lending products. “This means if you don’t repay the outstanding balance, the lender can take your home as payment for your debt.”
This article is sponsored by Credit Karma. We may earn a commission if you engage with their services using links in this article.
How much Gen Z needs to save for a comfortable retirement
The median net worth of Americans — how do you compare?
Social Security issuing one-time $90 checks - find out if you qualify
AT&T settlement is on its way - how to get your share
Retro frozen pizza brand discontinued and some fans are devastated
Quality of US retirement plunges in rankings - here are the countries doing better
