Looking to leverage your equity and step into a new home? The strategy of using home equity to move up is more relevant today than ever. With record-high homeowner equity levels and shifting market dynamics, sellers are in a position to take advantage, and this post walks you through the key takeaways: how much equity homeowners currently hold, five smart strategies to use that equity, and pitfalls to avoid. Keep reading to discover how you can turn your current residence into a launchpad for the next chapter.
Why now is a good time to use home equity to move up
Homeowners in the U.S. are sitting on unprecedented equity. In the second quarter of 2025, the total value of owner-occupied real estate reached a record $49.3 trillion, and homeowners’ equity increased to approximately $35.8 trillion, accounting for 72.6% of the total real estate value. Meanwhile, nearly 47.4% of mortgaged homes were considered “equity-rich” (loans less than half the market value) in Q2 2025.
That means if you’re thinking of using home equity to move up, you’re in a strong position. The equity you’ve built becomes purchasing power for your next move.
Assessing your home equity before you sell
Before you dive into a strategy, you want a clear picture of how much equity you have. First: determine your current market value (via recent comps or an appraisal) and subtract your remaining mortgage balance. That difference equals your equity.
Given the aggregate data above, many homeowners will find their equity cushion is stronger than they assumed. But remember: equity is not evenly distributed by geography. Some states saw decreases in equity year-over-year.
If you’re planning to use home equity to move up, this assessment step ensures you understand your foundation and what you can realistically leverage when selling.
Smart strategies
1. Choose the right timing for your sale
Because you’re planning to move up, timing matters. With interest rates still elevated and supply constraints limiting new listings, selling from a position of strong equity gives you flexibility. The aggregate equity cushion means you may feel less pressure, giving you space to wait for the right next home.
2. Leverage your equity as a down payment on the next home
When you sell, you can convert your home equity into a larger down payment on the next home, reducing your mortgage burden and potentially improving loan terms. Using your home equity to move up means your next home may have more desirable features or location, rather than staying put in your current property.
3. Balance selling costs and value uplift
Moving up often involves a higher purchase price, increased maintenance and taxes, and possible moving costs. Ensure the gain from moving is not offset by heavy new costs. Since current market data shows homeowners have strong equity positions, using home equity to move up means you have more buffer, but you should still run the numbers carefully.
4. Evaluate tax and loan implications
When you tap home equity (via sale) to move up, consider capital-gain implications (if applicable), closing costs, and potential new mortgage interest rate changes. The leverage potential of your equity gives you more optionality, but you’ll want professional advice on taxes and loan structure so that using your home equity to move up remains advantageous.
5. Prepare your next purchase while selling
Because you’re planning to move up, align your sale and purchase timelines. Using home equity to move up works best when you have pre-approved financing for the next home, know your market, and prepare contingencies (like temporary housing) in case there’s a gap. The strong equity position eases this process.
Things to watch out for when using home equity to move up
While the backdrop is favorable, there are risks. If home values in your area soften, your equity cushion might shrink. Even though national aggregates show strong equity, local markets vary.
Also, the next home might come with higher interest rates or financing challenges. So when using home equity to move up, don’t over-stretch your budget based on today’s equity alone.
Finally, remember that equity is only realized when you sell or refinance. Holding onto your current home without proper planning means you’ll miss the opportunity to move up effectively.
Key takeaways
Using your home equity to move up is a powerful strategy in today’s market. With homeowners holding record levels of equity, you’re potentially well-positioned to sell and upgrade. The five strategic steps, timing your sale, leveraging your equity smartly, balancing costs, understanding implications, and coordinating your next move, help you approach this transition with clarity and confidence.
Keep in mind the local market dynamically affects your equity power, so treat your equity as a tool, not a guarantee. With the right preparation and awareness, using home equity to move up can be a smart, forward-thinking move for sellers looking to take the next step.
