Yes, your house does count toward your net worth, but only the equity you’ve built in it, not the sticker value. Net worth is assets minus liabilities, so the home shows up on the asset side at its current market value and the mortgage sits on the liability side. The number that actually moves your net worth is the difference between the two. A handful of specific legal contexts, though, tell you to leave the house out entirely.
Calculating the Equity That Counts
Start with what the property would sell for today and subtract every debt secured against it. That includes the primary mortgage payoff, any second mortgage, and any outstanding balance on a home equity line of credit. Property tax liens and contractor liens recorded against the home come off as well. Use the actual payoff figure from your lender rather than the principal balance on your monthly statement, because the payoff includes accrued interest and fees you’d actually owe.
A quick example. A home worth $500,000 with a $350,000 mortgage payoff produces $150,000 in equity, and that $150,000 goes on your balance sheet. If the mortgage were $520,000 instead, the home contributes negative $20,000 and drags the total down.
Getting the Value Right
The weakest link is usually the property value itself. You have three main options. A formal appraisal by a licensed appraiser is the most reliable; expect roughly $400 to $600 for a standard single-family home, more in remote areas or for complex properties. A comparative market analysis from a real estate agent is free but less rigorous. Online automated estimates from sites like Zillow give a rough starting point but can’t account for renovations, deferred maintenance, or neighborhood quirks. For a casual check, the online figure is fine. For anything with financial consequences, pay for the appraisal.
Liquid Net Worth Leaves the House Out
Total net worth and liquid net worth are different measures, and confusing them can leave you overconfident about your cushion. Liquid net worth counts only assets you can convert to cash quickly without significant loss: bank accounts, brokerage holdings, money market funds. Your home is excluded because real estate is the opposite of liquid.
Selling takes months of listing, showings, inspections, negotiations, and title work. Agent commissions typically run 5% to 6% of the sale price, and closing costs add roughly another 1% to 3%. On a $500,000 sale, that’s $30,000 to $45,000 that never reaches your pocket. Someone with $1.2 million in total net worth but $900,000 of it in home equity has only $300,000 in liquid net worth. Wealthy on paper, but potentially unable to cover a sudden $50,000 expense without borrowing. Tracking both numbers separately gives a clearer picture of your actual flexibility.
The Accredited Investor Exclusion
Federal securities law carves the home out entirely for one specific purpose. Under SEC Rule 501 of Regulation D, you need net worth exceeding $1 million (individually or jointly with a spouse) to access certain private investment offerings such as hedge funds, venture capital, and private placements. For this calculation, the value of your primary residence is completely excluded as an asset.1eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D
Congress added the exclusion through Section 413(a) of the Dodd-Frank Act, and the SEC adopted implementing rules in December 2011.2U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard The mechanics are more nuanced than simply subtracting equity. The regulation removes the home from the asset column and removes mortgage debt (up to the home’s fair market value) from the liability column. The net effect matches removing your equity, but there’s a wrinkle: if the mortgage exceeds the home’s current value, that excess still counts as a liability.1eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D An underwater borrower loses the equity boost and takes a hit from the negative equity.
Concrete example: total net worth of $1.4 million with $500,000 of it in home equity strips down to $900,000, below the threshold. An income-based alternative also qualifies you: earning more than $200,000 individually (or $300,000 jointly) in each of the last two years, with a reasonable expectation of the same this year.3U.S. Securities and Exchange Commission. Accredited Investors
Government Benefits Treat the Home Favorably
Two major federal benefit programs exclude your home from resource limits, but the rules differ.
Supplemental Security Income
SSI imposes a strict $2,000 resource limit for individuals ($3,000 for couples), but your primary residence is completely excluded as long as you live in it.4Social Security Administration. Exceptions to SSI Income and Resource Limits Someone could own an $800,000 home free and clear and still qualify for SSI based on resources, provided their other countable assets stay under the limit.
Medicaid Long-Term Care
Medicaid’s rules for nursing home care and long-term services are conditional. Your home can be excluded from countable assets, but only if your equity interest stays below a threshold that varies by state. Federal law sets a floor and a ceiling that adjust for inflation annually.5Office of the Law Revision Counsel. 42 US Code 1396p – Liens, Adjustments and Recoveries For 2026, the minimum is $752,000 and the maximum is $1,130,000; each state picks a number in that range. If your equity exceeds your state’s limit, the home becomes a countable asset and can disqualify you.
The equity limit disappears entirely if a qualifying relative lives in the home: a spouse, a child under 21, or a child of any age who is blind or permanently disabled. Unmarried nursing home residents with no qualifying relative at the property must demonstrate an intent to return home for the exclusion to apply. Regular Medicaid (not long-term care) has no home equity limit at all.
Bankruptcy and the Homestead Exemption
If you file for bankruptcy, a homestead exemption protects a portion of your home equity from creditors. The federal homestead exemption under Chapter 7 is $31,575 per debtor as of April 2025, meaning a married couple filing jointly can shield up to $63,150 in combined equity.6Office of the Law Revision Counsel. 11 US Code 522 – Exemptions If your equity exceeds the exemption, a bankruptcy trustee can sell the home, return your exempted amount, pay creditors from the remainder, and give you anything left over.
Many states offer their own homestead exemptions that are far more generous, and some provide unlimited protection. States require you to use either the federal exemptions or the state exemptions, not both. Where you live can determine whether you keep the house. The federal figure adjusts every three years for inflation, so the $31,575 amount applies through at least early 2028.
Outside of bankruptcy, state homestead exemptions often protect home equity from seizure by unsecured judgment creditors as well. If a creditor wins a lawsuit and obtains a judgment, exempt property is off limits when you properly claim the exemption. The burden falls on you to assert the protection.
Keeping the Number Accurate
Home equity moves. The mortgage balance drops with every payment, and property values shift with the market. Recalculating once or twice a year is enough for general tracking, but update the figure whenever you’re making a decision that depends on it: applying for credit, testing accredited investor eligibility, or planning for long-term care.
The most common mistake is using the purchase price or the tax assessment as current value. Purchase prices go stale fast, and tax assessments in most jurisdictions lag the market by design. An online estimate is a reasonable ballpark for routine tracking; for anything with real stakes, a professional appraisal is worth the few hundred dollars.