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
Not sure where this fits in your process?
Answer a few questions and get a personalized homebuying roadmap: where you are now, what comes next, and which terms like this one matter at each step.
Start your roadmap