Equity
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 Equity

Equity Mortgage Lending Practice

The difference between the market value of a property and the debt owed against it is called the owner's equity. On a newly purchased $80,000 home with a $16,000 cash down payment, the buyer's equity is $16,000. As the value of the property rises or falls and as the mortgage loan is paid down, equity changes. For example, if the value of the home rises to $90,000 and the loan is paid down to $62,000, the owner's equity will be $28,000. If the owner pays the loan off so that there is no debt against the home, his equity will be equal to the market value of the property.

Equity Lending To FHA Programs