Home Equity

Business, Legal & Accounting Glossary

Definition: Home Equity



Full Definition of Home Equity


Home equity is the difference between a home’s value and any debt outstanding, such as a mortgage, for which the home is pledged as collateral. Because interest in title to the property is superior collateral, lenders readily grant credit against home equity. After the mortgage itself, the home equity loan and home equity line of credit are the most common products. For the borrower, interest on debt obtained through a reduction in home equity is tax-deductible. The typical homebuyer finances a home and starts with home equity equaling the down payment. Home equity can grow through repayment of the mortgage principal and via appreciation of home value. The home is said to be owned free and clear when home equity reaches 100% of the property’s value. When the real estate owned is not an owner’s home, home equity is usually shortened to simply equity.


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Home Equity. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 16, 2020 https://payrollheaven.com/define/home-equity/.
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Home Equity. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/home-equity/ (accessed: July 16, 2020).
American Psychological Association (APA):
Home Equity. PayrollHeaven.com. Retrieved July 16, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/home-equity/

Definition Sources


Definitions for Home Equity are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020 | 4 Views.