Equity Definition

Equity is the residual value of property beyond any mortgage or liability. For example, if you own a $300,000 home and owe $300,000 on the mortgage, you don’t have any equity; whereas, if you own the same $300,000 home and owe only $100,000 on the mortgage, you have $200,000 worth of equity in the home. The term can also be applied to any number of other financial instruments or types of property-for example, stocks are said to have equity, being the difference between the market value of the stocks and the costs incurred to obtain the stocks.