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For decades, the conversation around home equity has centered on familiar financial questions: What is the interest rate, what is the repayment term, and what will the monthly payment look like?
Those questions made complete sense in a world where the primary way to access housing wealth was through traditional borrowing — home equity loans, lines of credit or refinancing. In those scenarios, rate and repayment structure naturally became the lens through which homeowners compared their options.
But the home equity landscape is beginning to shift, particularly for homeowners in the mass affluent and affluent segments. Today, the U.S. housing market sits on a historic accumulation of tappable wealth.
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According to Federal Reserve data, total homeowner equity in residential real estate stands near $35 trillion — remaining at historically elevated levels even as home price appreciation has moderated.
According to Cotality, the average mortgaged homeowner holds about $299,000 in home equity as of Q3 2025. Data from Bankrate and ATTOM indicate that as of Q1 2025, nearly half of all mortgaged properties are considered “equity rich,” meaning the outstanding loan balance is less than half the home’s estimated value.
For many of these households, the challenge is no longer simply gaining access to capital. In most cases, they already have substantial wealth stored in their homes after years — or decades — of paying down mortgages and benefiting from property appreciation.
Instead, the real issue is something far less frequently discussed in financial planning conversations: Friction.
- How difficult is the process?
- How invasive is the underwriting?
- How much disruption will the transaction cause to the rest of their financial structure?
For an increasing number of homeowners and their advisers, those questions are beginning to matter more than the rate itself.
The hidden complexity of traditional home equity borrowing
Traditional home equity lending has long followed the same structure as other consumer loans. Borrowers must typically provide income documentation, satisfy debt-to-income thresholds and undergo a detailed underwriting process.
But for a meaningful portion of affluent households, the process introduces real complications.
Retirees frequently have substantial assets but modest reportable income. Entrepreneurs and business owners may have complex income structures that are difficult to document cleanly — most lenders require two years of personal and business tax returns, profit-and-loss statements and 12 to 24 months of bank statements for self-employed applicants.
And even when borrowers qualify easily, the process can require weeks of documentation, underwriting and closing steps before a single dollar is accessible.
For homeowners who already have strong balance sheets, that level of complexity can feel disproportionate to the outcome. The question becomes less about whether home equity can be accessed and more about how much friction is required to access it — and whether the terms of that friction are worth it.
Housing wealth as a planning asset — and why that shift is accelerating
Financial advisers are encountering a related dynamic within the planning process itself. For many households approaching or already in retirement, a home represents one of the largest assets on the balance sheet — sometimes rivaling or exceeding the value of investment portfolios.
According to Pew Research Center, the median U.S. household net worth drops by roughly half when home equity is excluded from the calculation. For many retirees and near-retirees, that statistic isn’t abstract: Their home is the balance sheet.
Yet historically, that asset has remained largely outside the financial planning framework unless a client chose to refinance, borrow against the property or eventually sell. That blind spot is narrowing.
Research from Vanguard suggests that only about 40% of Baby Boomers nearing retirement are on track to maintain their pre-retirement lifestyle — and that incorporating home equity into the retirement income equation could improve that number by as much as 20 percentage points.
The implication for financial advisers is difficult to ignore: The largest single asset on many clients’ balance sheets has been missing from the planning conversation.
That omission has practical consequences. When retirement income needs to be structured, when taxes associated with Roth conversions need to be managed, when portfolios need protection during volatile market periods or when insurance strategies need funding — the question is rarely whether the right strategy exists. It is whether the right source of liquidity exists to support it.
For many households, housing wealth could be that source. The challenge historically has been that accessing it required accepting a level of process complexity that disrupted everything else.
This dynamic is reflected in broader borrower behavior. A 2025 TD Bank survey found that nearly three-quarters of homeowners plan to remain in their current homes over the next two years, with 58% citing their existing favorable mortgage rate as a key reason not to sell.
Those homeowners are not disengaging from home equity — they are looking for ways to access it without sacrificing the financial positions they worked to build. That preference is driving measurable demand for home equity solutions that prioritize simplicity and speed alongside competitive economics.
What is changing, then, is not the size of home equity as an asset — it remains historically large across the U.S. housing market — but how it is increasingly being evaluated as part of the broader financial ecosystem.
Housing wealth is moving from the periphery of the planning conversation toward the center, considered alongside investment portfolios, retirement income strategies, insurance planning and tax management rather than sitting in a category of its own.
A growing interest in lower-friction home equity solutions
In response to that challenge, new approaches to accessing housing wealth have begun to emerge and gain traction. The broader home equity lending market is accelerating on multiple fronts.
The Mortgage Bankers Association’s 2025 Home Equity Lending Study found that total HELOC and home equity loan originations grew 7.2% in 2024, with debt outstanding expanding 10.3% over the same period. Lenders surveyed expected nearly 10% further growth in HELOC debt outstanding in 2025 alone.
In addition to that expanding market, non-traditional home equity structures have been gaining ground, perhaps in part because they address the friction problem differently.
Among them is the home equity investment agreement, often referred to as an HEI. Rather than operating as a loan, an HEI provides capital to the homeowner in exchange for a contractual interest in a portion of the home’s future value. There are no monthly payments and no traditional interest charges.
Settlement may occur at a fixed maturity date or when a defined future event takes place, such as the sale of the home, or when the homeowner permanently moves out or passes away.
As institutional capital has flowed into the HEI space and the securitization market around these products has matured, the category has grown substantially — a trend well documented by independent market research as the HEI model gains broader homeowner acceptance.
For some homeowners and advisers, the appeal of this structure is not purely financial — it is operational. Many HEI structures do not require income verification and do not affect the existing mortgage, which means the application to funding process can be simpler and less invasive than traditional borrowing, particularly for households with complex income profiles.
For the large share of homeowners who locked in sub-4% mortgage rates during 2020 and 2021, the ability to access home equity without refinancing also means preserving a rate that may not return for years.
That combination — ease of execution paired with rate preservation — is increasingly a real factor in how advisers and their clients evaluate their options.
This shift mirrors a broader transformation already underway across financial services. Non-traditional lenders — fintechs, independent mortgage banks — captured 15% of the home equity origination market in 2024, up from just 2% five years earlier.
The driving force isn’t price alone. It is the experience of access: The speed, simplicity and degree of disruption involved in converting a balance sheet asset into usable liquidity.
For advisers and their clients, those factors have become competitive considerations in their own right — and the home equity market, much like consumer banking and investment management before it, is evolving to reflect them.
The principle taking shape
For advisers and homeowners alike, the home equity conversation is expanding beyond the familiar questions of rate, term and monthly payment.
Housing wealth is increasingly being evaluated as a dynamic component of a financial plan — one that can fund planning strategies, support retirement income, preserve portfolio assets and provide liquidity without the friction that has historically made it the last option considered rather than the first.
The specific tools used to access that wealth will continue to evolve, and the regulatory landscape around newer structures like HEIs continues to mature.
But one principle appears to be gaining traction across the advisory community and mass affluent households: For many clients, the future of home equity will not be defined solely by pricing.
It will be defined by simplicity, flexibility and the ease with which housing wealth can be integrated into the full financial plan — earlier, more intentionally and on terms that work with the rest of a household’s financial structure rather than against it.
