Is My Home Part of My Net Worth? How to Count a House and a Mortgage
Yes. Your home is an asset, your mortgage is a debt, and they go on the page as two separate lines.
What catches people is not whether to count the house. It is what number to write next to it. For most homeowners the home is the largest single line they have, so a generous guess moves everything.
Here are five ways to put a value on it, what each is good for, and why it is worth knowing your number both with the house and without it.
Every line in its place, including the biggest one. Example data.
The short version
List the home at what it would sell for, and the mortgage at the balance still owed.
Never net them off in your head. Two lines, always.
Use a cautious value. A hopeful one flatters the whole picture.
Work out your net worth with the home and without it. They answer different questions.
Five ways to value your home
Method | What it is | Watch for |
|---|---|---|
Recent nearby sales | What similar homes near you sold for in the last few months | The best one on the street is not yours |
Tax assessment | The value your county uses for property tax | It often lags the market, in either direction |
Online estimate | An automated figure from a property site | Treat it as a range, not a number |
An agent's opinion | A local agent's view of a likely sale price | It may lean optimistic if they would like the listing |
Appraisal | A paid, formal valuation | The most reliable, and rarely needed just for this |
For a quarterly net worth figure, recent nearby sales with a cautious eye is enough. You are not selling the house. You are trying not to fool yourself.
How much the choice of number matters
Take a household that owns $121,700 outside the home and owes $20,000 outside the mortgage, with $198,000 left on the mortgage.
Home valued at | Total owned | Total owed | Net worth |
|---|---|---|---|
$290,000, cautious | $411,700 | $218,000 | $193,700 |
$310,000, middle | $431,700 | $218,000 | $213,700 |
$340,000, hopeful | $461,700 | $218,000 | $243,700 |
Same household, same day, and a $50,000 spread that comes entirely from one guess. Nothing she did changed. This is why the method matters more than the decimal places.
Pick one way of valuing the home and use the same way every time. A consistent cautious number shows you real change. A number that moves with your mood shows you nothing.
The mortgage side
Write down the balance still owed today, from your latest statement. Not the original loan, and not the monthly payment.
Anything else secured on the home goes on the debt side too.
A second mortgage
A home equity loan
The amount drawn on a home equity line of credit
Any property tax you owe and have not paid
The difference between the value and everything owed against it is your equity. On the middle line above, that is $310,000 minus $198,000, or $112,000.
What you own and what you owe, added up for you. Example data.
Why to know the number without the house
Because you cannot spend a kitchen.
Home equity is real wealth, and it is also the hardest kind to use. You can reach it by selling, which costs money and means living somewhere else, or by borrowing against it, which is a new debt.
So it helps to keep two figures. Your net worth including the home tells you what you have built. Your net worth without it tells you what you could draw on in a difficult year or live on in retirement without moving.
View | Owns | Owes | Net |
|---|---|---|---|
With the home | $431,700 | $218,000 | $213,700 |
Without the home or the mortgage | $121,700 | $20,000 | $101,700 |
Neither is the true one. If your plan for later life depends on staying in the house, the second figure is the one doing the work.
If you rent
Then this line is empty, and that is not a failing. A renter has no home equity and no mortgage, and often has more in accounts she can reach. Count what you have, and compare yourself with your own number last quarter.
If you own a rental or a second home
Each property gets its own pair of lines: a cautious value, and the balance owed against it. Keep them separate from your main home so you can see what each one is doing.
Three mistakes with the home line
Using what you paid. The purchase price is history. What it would sell for now is the figure.
Using the best sale on the street. Use the typical one, and lean low.
Changing method between quarters. If the home rose $20,000 because you switched from the tax assessment to an online estimate, nothing happened.
Put yours in one place, free
This is the job the Net Worth Tracker does. La Soglia, the free membership of the Money Mastery System, holds your home, your mortgage and everything else you own and owe in one place, personal and business together, with no bank connection and no card. Enter the two lines once, update them each quarter, and the change is there to see.
If you are new to the idea, start with our post on what counts toward net worth. If retirement is the question behind it, the nest egg needed in every state assumes a paid-off home and shows what that changes.
Bring it to the Collective
Not sure what value to use for your home? Ask in the discussion feed. The Money Mastery Collective is open on the free membership.
Questions we hear
Do I include my house in my net worth?
Yes. List the home as an asset at a cautious sale value and the mortgage as a separate debt.
What value should I use for my home?
What it would realistically sell for today, leaning low. Recent sales of similar homes nearby are a sensible guide.
Is home equity the same as net worth?
No. Equity is the home's value minus what is owed against it. Net worth is everything you own minus everything you owe.
Should I calculate net worth without my home?
It is worth knowing both. The figure without the home shows what you could use without selling or borrowing against the house.
References
The treatment of a primary residence as an asset and a mortgage as a debt follows the Federal Reserve Survey of Consumer Finances. The household figures are our own worked example.
Start free with La Soglia
La Soglia is the free membership of the Money Mastery System. It gives you the Net Worth Tracker, where everything you own and everything you owe sits in one place, and the Money Mastery Collective. There is no card to enter and no bank connection.
Keep in touch
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A note on what this is
This article is educational. The Money Mastery System is an educational tool, not financial software, and nothing here is legal, tax, investment or financial advice. The figures are illustrations, and how to value a property depends on its market and your own situation. For guidance on your own circumstances, please speak with a qualified professional who knows them.
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