You add up your net worth for the first time and the total looks great. Then you notice that 80% of it is the house you live in, and you can't exactly spend a kitchen. So should your home count in your net worth or not? The honest answer is both, and here's why.
For many homeowners, property is the single largest thing they own. Leave it out and your net worth can look tiny. Put it in and the number can hide the fact that you have very little you could actually use in a hurry.
Let's look at the arguments on each side, how to value a home without fooling yourself, and a simple way to track it that gives you the full story.
What Counts as Your Home in Net Worth?
Net worth is everything you own minus everything you owe. For a home, that means two separate lines:
- The asset: what the property is realistically worth today.
- The liability: what's left on the mortgage.
The difference is your home equity. A $400,000 home with a $300,000 mortgage adds $100,000 of equity to your net worth, not $400,000. Listing both sides also means you'll see your net worth rise every time a mortgage payment reduces the balance. If you're unsure how to set it all out, this step-by-step net worth guide walks through it.
The Case for Including Your Home
There are good reasons most standard definitions of net worth include property:
- It's real value. If you sold, you'd walk away with money. Ignoring that undercounts your wealth.
- Paying the mortgage is saving. Part of every payment builds equity. Leaving the home out hides that progress.
- It matters for later life. Downsizing, releasing equity or simply living rent-free in retirement all depend on it.
- It keeps you honest about debt. A mortgage is usually your biggest liability. Counting the loan but not the home would make no sense.
The Case for Leaving It Out
The other side has a point too:
- You need somewhere to live. Selling your home means buying or renting another one, so the cash doesn't simply appear in your pocket.
- It's hard to access. You can't sell a bedroom to cover a $2,000 car repair.
- Prices can mislead. A rising local market can make you feel richer without changing what you can spend.
- Selling costs money. Agent fees, legal costs and moving costs can eat a noticeable chunk of the price.
The Better Answer: Track Two Numbers
Rather than picking one side, look at your net worth two ways. Here's an example household.
They own a home worth $350,000 with a $260,000 mortgage. They also have $12,000 in savings, $38,000 in a pension, $8,000 in investments and a car worth $9,000. They owe $3,000 on a credit card and $6,000 on a car loan.
| View | What's included | Result |
|---|---|---|
| Total net worth | Everything owned ($417,000) minus everything owed ($269,000) | $148,000 |
| Net worth without home | Remove the $350,000 home and the $260,000 mortgage | $58,000 |
| Liquid net worth | Savings and investments ($20,000) minus the card and car loan ($9,000) | $11,000 |
All three numbers are useful. The total shows long-term wealth. The version without the home shows how much you've built beyond your own four walls. The liquid figure shows what you could reach in a pinch, which is useful when thinking about emergencies.
Watching all three over time tells you even more. If total net worth climbs every year but the number without the home stays flat, your wealth is growing mainly because of house prices and mortgage payments. That's not bad, but it may be a nudge to build some savings and investments outside the property too.
Note that the pension is left out of liquid net worth because in most countries you can't access it until a set age.
How Do You Value Your Home for Net Worth?
This is where people most often overstate things. A few habits keep it fair:
Use a cautious estimate
Look at what similar homes nearby have actually sold for recently, not what they're listed at. Online estimates can be a starting point, but they vary. If you get three figures, lean toward the lower one.
Consider selling costs
Some people knock a percentage off to reflect what they'd really receive. If selling costs came to 5% of a $350,000 home, that's $17,500. Your equity would be closer to $72,500 than $90,000.
Don't update it every week
Home values don't change meaningfully day to day. Updating once or twice a year is plenty, and it stops your net worth from bouncing around on guesses.
Leave renovations out until they add value
A $20,000 kitchen doesn't automatically add $20,000 to the price. Update the value when local sales suggest it's worth more, not when the invoice arrives.
Write down how you valued your home and the date. Next year, use the same method. Consistency matters more than getting the exact figure right.
What About Rental Property or a Second Home?
These are easier. A rental property or holiday home you don't live in is more like an investment. You don't need it for shelter, and selling it wouldn't leave you without a place to live. Most people include it in net worth without much debate, along with its mortgage.
If you're still paying off a home, it's also worth reading about how to think about good and bad debt, since a mortgage is often put in the "good" pile without much thought.
Where Netvo Fits
Netvo lets you add your home as an asset and your mortgage as a liability, so equity shows up clearly. The Distribution view shows how much of your wealth sits in property compared with cash, pensions, investments and everything else. That makes it easy to spot when one asset is doing all the heavy lifting.
The History chart tracks your net worth over time as the mortgage shrinks. It's all private too: no bank login, no account, and your data stays on your device.
See your home equity clearly.
Track property, mortgage and everything else in one private place. Free on iOS and Android.
Frequently Asked Questions
Should I include my house in my net worth?
Most definitions of net worth include your home's value minus the mortgage. It's also helpful to track net worth without your home, because you can't easily spend the value of a place you live in. Looking at both gives the clearest picture.
What is liquid net worth?
Liquid net worth is the money you could access fairly quickly, such as cash and investments you can sell, minus your debts other than the mortgage. It usually leaves out your home and retirement accounts that can't be accessed until later in life.
How do I value my home for my net worth?
Use recent sale prices of similar nearby homes, and lean toward a cautious figure. Some people subtract estimated selling costs too. Update it once or twice a year using the same method each time.
Does paying off my mortgage increase my net worth?
Yes. The part of each payment that reduces the loan balance lowers your liabilities, so your net worth rises. The interest part is a cost and doesn't add to your net worth.
Netvo is a private net worth tracker for iOS and Android. More from the blog.