Home equity is the portion of your home’s value that you truly own, free from any outstanding mortgage or lien. It’s calculated by subtracting the amount you still owe on your home loan from your property’s current market value. For example, if your house is worth $350,000 and you owe $200,000, then your home equity is $150,000. Think of home equity as a growing financial asset tied to your home. As you pay down your mortgage or as your property value rises, your home equity increases.