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Equity
Property equity is the property's current value minus the mortgage debt against it.
In property finance, equity is the portion of a property's current value remaining after subtracting the mortgage debt against it. It describes the owner's stake in the property rather than the property's full value.
The calculation depends on both the property value used and the mortgage balance. Equity is therefore different from the original down payment or a property's purchase price.
Source: CFPB: Mortgages key terms.
Frequently Asked Questions
Is equity the same as the original down payment?
No. A down payment is an amount contributed at purchase; current equity uses the property's current value and remaining mortgage debt.
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