The Formula
Real estate equity = market value − mortgage and other loans secured on the property. Add the equity of each property to your other assets, subtract your other debts, and you have your net worth.
Example: a home worth $450,000 with a $280,000 mortgage ($170,000 equity) plus a rental worth $300,000 with a $210,000 loan ($90,000 equity) gives $260,000 of real estate equity. If selling would cost about 6% of the value ($45,000), the "if sold" equity is $215,000.
Step by Step
- Estimate today's market value from recent comparable sales, an appraisal or several online estimates. Avoid the purchase price and avoid the highest estimate.
- Look up the exact loan balance on your latest mortgage statement, including any home equity loan or HELOC balance.
- Subtract to get equity for each property.
- Optionally subtract selling costs (agent commission, closing costs, transfer taxes) for a conservative figure.
- Count only your share if you co-own a property or hold it through a partnership.
Common Mistakes
- Counting the full property value instead of equity.
- Forgetting a second mortgage or HELOC.
- Counting expected rent or future appreciation as if it already existed.
- Updating values monthly; real estate is illiquid, so an annual review is enough.
Does Home Equity "Count" for Being a Millionaire?
For ordinary net worth, yes. Some formal definitions exclude the primary residence: the SEC's accredited-investor test and the "investable assets" measure used in wealth reports. See what counts as a millionaire for the details.
To project how property equity grows over time through appreciation and mortgage paydown, use the real estate net worth calculator or the house appreciation calculator.
General information only, not financial, legal or tax advice.