Home equity
Equity
The share of your home you actually own — its market value minus everything you owe against it. Equity grows as you pay down principal and as the home appreciates.
What does equity mean?
Equity is your ownership stake: a $300,000 home with a $210,000 mortgage holds $90,000 of equity. It builds two ways — by paying down principal and by the home rising in value — and it's what you tap with a HELOC, a home equity loan, or a cash-out refinance.
Many Michigan owners have far more equity than they realize after values climbed since 2020.
Lenders generally let you borrow against equity only down to 80–90% combined loan-to-value, so you keep a cushion of ownership.
A Michigan example
Suppose your home is worth $285,000 and you owe $200,000. Your equity is $85,000. At an 85% combined loan-to-value cap, a lender would let total borrowing reach about $242,250.
Subtract the $200,000 you already owe, and roughly $42,250 of that equity is accessible to borrow — the rest stays as your ownership cushion.
Common questions
How do I build home equity?
Two ways: paying down your principal and the home rising in value. Many Michigan owners gained substantial equity as values climbed since 2020, often more than they realize until they check current comparable sales.
How much equity can I borrow against?
Usually down to 80–90% combined loan-to-value, so you keep a cushion. On a $285,000 home where you owe $200,000, that leaves roughly $42,000 accessible. You tap it via a HELOC, home equity loan, or cash-out refinance.
What is negative equity?
Owing more than the home is worth — being "underwater." It blocks refinancing and complicates selling, since you'd owe the lender the shortfall. It's far less common in Michigan after recent value gains.
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