HomeownershipHomebuying Glossary
Underwater Mortgage
Also known as Negative Equity
Owing more on your mortgage than your home is currently worth.
In plain English
A mortgage is "underwater" when your remaining loan balance exceeds your home's current market value — meaning you'd owe money to sell, rather than walking away with proceeds.
Why it matters
This is more likely with a very small down payment in a declining market, which is one reason a healthy down payment provides a real cushion.
Where you'll run into it
Guides and tools on TheBuyingPath that cover underwater mortgage in context.
Related terms
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