What should I know about personal debt to equity ratio?

Your personal debt to equity ratio compares what you owe on secured debts, like a mortgage or auto loan, against the current market value of the assets backing those debts. For most people, the number that matters is your home equity: divide your remaining mortgage balance by your home’s appraised value. A ratio above 80% means you have less than 20% equity, which typically triggers private mortgage insurance and limits refinancing options. If the ratio exceeds 100%, you are underwater on the loan.

If you are asking this question, you likely carry a mortgage or a car loan and are worried about your financial stability. You may be facing a job loss, reduced income, or a medical expense that makes monthly payments harder. The risk here is not just losing equity, but losing the asset itself through foreclosure or repossession. A high ratio also blocks you from using a home equity line of credit to consolidate other debts, which can trap you in higher-interest unsecured debt.

Before you panic, gather your most recent mortgage statement and a realistic home value estimate from a recent appraisal or comparable sales. Then list all other secured debts with their balances and interest rates. If your ratio is above 80% and you are struggling to pay, your options are limited. You might negotiate a loan modification with your lender, but that requires proof of hardship. Selling the asset is possible but may not cover the loan balance if you are underwater. Debt relief programs for secured debts are rare and depend heavily on your state, the type of debt, the severity of your hardship, whether your account is current or delinquent, and the specific criteria of any partner program.

For a practical first step, use the private assessment on our homepage. It takes about five minutes, asks for no personal contact information, and gives you a preliminary review of your situation before you speak with anyone. That clarity can help you decide whether to pursue a modification, a short sale, or a different strategy entirely.