Building and preserving the equity in a home is an important goal for many homeowners, and mortgage industry experts have some tips can help them reach that goal in 2026.
Homeowners may need to make some intentional moves, according to CBS News. Since it can vary by which mortgage product the homeowner has, working with the mortgage company can help reach the goal.
In recent years, most homeowners have seen their home equity rise considerably, along with their home values. According to the latest ICE Mortgage Monitor data, the average homeowner with a mortgage now holds roughly $204,000 in tappable equity.
CBS said that equity gains may slow as home value growth cools and borrowing costs remain elevated for new mortgage loans, as well as home equity loans, and home equity lines of credit (HELOCs).
But, what are the best moves to boost home equity?
CBS said to boost home equity in the new year, the homeowner should consider the following expert-recommended strategies.
Pay Down Principal and Reduce Debt
U.S. home price increases are slowing and 2026 might be a good year to increase home equity by paying down the principal balance on your mortgage, CBS said.
“Increasing your monthly payment above and beyond the required monthly payment amount is a great way to build equity fast,” said Michelle Parkison, senior vice president at AD Mortgage. “If you can afford the additional monthly cost, any funds above the required payment go directly to paying down the loan principal, which means you own more of that home.”
CBS said homeowners might consider applying tax refunds, work bonuses and any other cash windfalls toward their home loan’s principal balance.
CBS said another good way to boost the equity in a home is by directly increasing the property’s value through improvements and repairs.
The network said the homeowner will get the biggest return on their investment and recoup an average of 268% of their costs by replacing the garage door, according to Zonda’s 2025 Cost vs. Value Report. Or, CBS said, a minor kitchen remodel and adding a wood deck can return an average recouped value of nearly 113% and 95%, respectively.
“Homebuyers love a good outdoor space,” Parkison said. “Look into an enticing backyard retreat that you can enjoy. Kitchens are another big area that can make or break a home. Focus on areas in the house that become gathering spaces.”
As home values cool down, CBS said the homeowner should make sure they understand their local market’s value trends before investing in upgrades.
“This is always important—a very good idea to discuss any updates you are considering with a local real estate agent who can advise on what will get you the best bang for your buck,” said Sarah DeFlorio, VP of Mortgage Banking at William Raveis Mortgage.
Avoid a Common Mistake
CBS said homeowners should avoid a common home equity mistake by matching any upgrades you make with the lot and neighborhood.
“Homeowners make mistakes in both building and over-improving homes that are on poor lots or in neighborhoods that are not desirable,” Jeff Lichtenstein, President and Broker at Echo Fine Properties, says.
CBS said that strong surrounding growth can support higher values.
“If the neighborhood surroundings are growing, then even if it’s top of the market, there is room to grow—even if it’s a record price—so long as the lot is a premium,” Lichtenstein said.
Factor in timing, CBS said.
“Thinking about how long you want to stay in your home should be a main factor in how you grow home equity,” Parkison said. “If your answer is that you are not going to stay in your house very long, focus on cheaper enhancements to your home that will make it more attractive.”
DeFlorio suggested an often-overlooked strategy to increase the equity position: a mortgage recast.
That’s when a homeowner makes a large one-time payment toward the principal, which increases the equity immediately, and the monthly payment is recalculated based on a lower balance. CBS said that with mortgage rates still elevated, a recast can be a beneficial way to pay down principal instead of refinancing into a higher rate.
“Not all mortgages offer this feature, but a recast is a great way to boost your equity if you have extra funds lying around. This means you pay down the principal balance, and the monthly payment for the mortgage will adjust to reflect the lower loan amount,” DeFlorio said.
