7 Ways to Build Equity by Going From Renting to Owning

What Is Equity?

Home equity is the portion of your property that you truly own. It is the difference between your home’s market value and the total amount you still owe on your mortgage and any other loans secured by the property. As your mortgage balance decreases and your home value increases, your equity grows.

How Is Equity Calculated?

Calculating equity is straightforward. Add together the balances of your mortgage and any other loans secured by your home. Then subtract that total from your home’s current market value.

Example: If your home is worth $350,000 and your total mortgage balance is $120,000, your equity equals $230,000.

Can You Use Your Home’s Equity?

Some homeowners access part of their equity through a Home Equity Loan or a Home Equity Line of Credit (HELOC). These options allow you to borrow against your equity without selling your home. Most lenders require you to maintain at least 20% equity, meaning only a portion of your equity is accessible.

7 Ways to Build Equity by Going From Renting to Owning

1. Make a Larger Down Payment

Your down payment becomes your initial equity. The more you put down when purchasing your home, the more equity you start with.

2. Buy a Home That Needs Improvements

Purchasing a home that needs repairs or renovations can help you build equity faster. In many cases, the value added through renovations exceeds the cost of the work, increasing your equity sooner.

3. Set Up Automatic Mortgage Payments

Automatic payments help prevent missed or late payments, protect your credit score, and ensure consistent equity growth.

4. Create and Follow a Budget

Sticking to a budget helps control expenses and allows you to apply extra funds toward your mortgage principal.

5. Repair Your Credit Score

If credit issues are holding you back from homeownership, repairing your credit is often the first step. Improving your credit can help you qualify for better mortgage terms and begin building equity sooner.

Learn more about credit repair for homebuyers and how it supports long-term homeownership.

6. Pay Extra Toward Your Mortgage Principal

Extra principal payments reduce the amount of interest paid over the life of the loan and accelerate equity growth.

7. Seek Professional Guidance

Professional guidance can help address credit challenges, budgeting issues, or mortgage preparation hurdles so you can move from renting to owning faster.

Invest in Yourself

Rent builds your landlord’s wealth. Homeownership helps build yours. When you stop renting and start building equity, you’re investing in your future.

Ready to start building equity instead of paying rent? Sign Up Today!

Educational content only. Not legal, tax, or lending advice. Results vary by credit profile.