How Much Home Equity Do You Need to Move Up to a Bigger House?

If you own a home in Snohomish County that you bought more than five years ago, there is a good chance you have more equity than you realize. Move-up buyers routinely tell me they assume they cannot afford the next house because they have seen what the monthly numbers look like at today's rates, and the surprise is usually how much their equity changes the picture.

The 20% rule is a guideline, not a law

Conventional wisdom says you need 20% down to avoid private mortgage insurance. It is a good target, and with a 20% down payment you avoid PMI and often qualify for a better rate. But move-up buyers regularly move with 10% to 15% down, accept PMI for a few years, and come out ahead because they bought the right house at the right price.

What your equity actually buys you

Here is a typical example, and I want to stress the numbers are illustrative, not a promise: say your current home is worth $800,000 and your remaining mortgage is $450,000. That is $350,000 in equity, roughly a 44% position in the property. Applied to a $1.1 million move-up home, that equity is a 32% down payment, no PMI, and a significantly lower financed amount. The monthly jump is real, but it is far smaller than most people assume before they run the numbers.

How lenders count equity

• Sale proceeds: the cleanest source. Sell first, or close both transactions within days, and your equity becomes your down payment.
• HELOC or bridge: allows you to buy first by borrowing against equity you have not realized yet.
• Stated equity on a refinance or rate buydown: some strategies use your position to lower the rate on the new loan.

The calculation that matters

The question is not only how much equity you have, but what the whole move costs per month after accounting for the new payment, taxes, and insurance, minus what you stop paying on the old loan and the value you get from the larger home. That net figure is what tells you whether the move works.

My experience with move-up clients: most people are closer to their next home than they believe, and the biggest obstacle is usually a lack of current numbers, not a lack of options.

Send me your current mortgage balance and the home you are considering, and I will show you the equity math, the realistic down payment, and the monthly payment at today's rates. If the move works, we will know exactly how to sequence it.