Direct answer
What does Equity mean?
The owner's value in property after subtracting liens from the property's value for the calculation being used.
Exam cue: For simple exam math, equity equals value minus debt, unless the question supplies other claims or costs.
What does it look like in a question?
New York example
A home worth $500,000 with a $300,000 mortgage has $200,000 in simple equity.
Common exam trap
What should you not confuse it with?
Equity is not cash until it is realized through a sale, loan or other transaction.
Related real estate finance terms
AmortizationRepayment of debt through scheduled payments that reduce principal over time.Balloon paymentA final payment that is substantially larger than the preceding scheduled payments.Debt serviceThe scheduled principal and interest payments required on debt for a stated period.ForeclosureThe legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.Loan-to-value ratioThe loan amount expressed as a percentage of the applicable property value or price.MortgageA security instrument that creates a lien on real property to secure repayment of a debt.
Sources used2 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
Keep learning
Put the term back into its full subject.
A definition helps with recall. The subject guide shows how the rule interacts with documents, scenarios, calculations and practice questions.