Most Homeowners With Non-Mortgage Debt Owe $10K+—Here’s How They’re Managing It

A new survey from TD Bank reveals that 65% of homeowners carrying non-mortgage debt owe $10,000 or more, underscoring the financial insecurities lingering beneath an otherwise stable housing market.

There seem to be several factors at play: First, the cost of living has remained stubbornly high since the pandemic, stretching household budgets. At the same time, the lock-in effect continues to stall homebuying and selling, as many homeowners stay put rather than take on a new mortgage at double the rate they already have.

So instead of trading down to something more affordable or trading up for more space, homeowners are looking inward—consolidating high interest debt, renovating, and finding new ways to use their homes as financial tools.

“We’re seeing a real mindset shift from ‘time to move’ to ‘time to maximize,’ says Dena Cutler, founder of The Cutler Real Estate Group. “Homeowners are investing in the spaces they already love instead of trading low mortgage payments for higher ones.”

And now, that strategy is starting to show up in the numbers. 

An overwhelming 86% of homeowners who’ve tapped equity products view home equity lines of credit as an important part of their financial safety net, according to the HELOC Trend Watch survey from TD Bank. The survey also found that 70% of all homeowners say using home equity products could boost their overall financial confidence, in a sign that home equity has become the modern buffer against broader economic uncertainty.

As Steve Kaminski, head of residential lending at TD Bank, puts it: “We are seeing an increasing number of individuals leveraging their home equity as a means to enhance their financial position.”

The hidden debt load

Homeowners are sitting on $34.7 trillion in equity, yet much of that wealth is trapped on paper. And behind the gains, a growing share of households are struggling with debt.

A majority (84%) of homeowners carry some form of non-mortgage debt, according to TD Bank’s survey.

That debt can take many forms: credit cards, auto loans, student loans, personal loans, or medical bills, to name just a few. What makes the picture more complicated is that all those types of debt can carry different rates and terms, making repayment burdens difficult to capture.

And now, untamed inflation threatens to add to those burdens.

In August, overall prices rose 2.9% from a year earlier, driven by higher food, energy, and housing costs, according to the Labor Department’s Consumer Price Index. Rent climbed 3.6%, while owner’s equivalent rent—a key measure for homeowners—rose 4%.

That squeeze is absorbing cash that might otherwise go toward reducing balances. The result is a fragile equilibrium of homeowners who are asset-rich but cash-constrained.

The rise of debt consolidation through home equity

That tension is part of why borrowing against a home has become so popular for homeowners: 70% of indebted homeowners say they would consider consolidating their balances into a single loan with a lower rate, according to the survey.

While homeowners have a variety of tools they can use to borrow against their home, a HELOC has emerged as a favorite. Once viewed as a tool for renovations, it’s now being repositioned as a financial safety net due to the flexibility it provides.

The math makes sense on paper: The average credit card APR now exceeds 20%, while many HELOC rates hover between 9% and 11%. Rolling high-interest debt into a lower-rate loan can free up hundreds of dollars in monthly cash flow—especially for households juggling multiple revolving accounts.

But it’s not without risk.

“You’ve traded in unsecured debt for a higher-stakes gamble with your home,” says Xavier Epps, CEO of XNE Financial Advising and a former FINRA-licensed Registered Representative. “If your income dips or housing prices slide, there’s no buffer left to catch you.”

Andrew Fortune, owner and Realtor® at Great Colorado Homes in Colorado Springs, CO, agrees. “Taking a loan out on a property that may decrease in value soon seems like a bad idea,” he says. “It also signals that people are not doing well financially, forcing them to take these loans to make ends meet.”

The trade-off is clear: Homeowners can relieve short-term pressure by borrowing against long-term security, but only if the value of their homes holds steady.

Remodeling instead of relocating

But that financial precarity is only one part of the picture. A majority (53%) of homeowners who’ve used a HELOC or home equity loan did so to fund renovations, while 41% used the funds for major home purchases, like new furniture or maintenance supplies, the survey found.

That trend shows no sign of slowing. 

Two-thirds (66%) of homeowners are currently renovating or plan to within the next two years, with the most popular projects focused on enhancing outdoor spaces (43%) and value-boosting upgrades (40%). Among those leading the charge are millennials (38%) and Gen Z homeowners (41%), who see renovation as both a lifestyle choice and a long-term financial strategy.

“This isn’t hesitation; it’s intention,” says Cutler. “Homeowners are making data-driven, emotionally intelligent decisions with their equity front and center, choosing stability, comfort, and smart financial moves over uncertainty.”

In a housing market defined by high prices and limited inventory, home improvement has become a form of financial planning: a way to adapt, personalize, and add value without stepping back into the volatility of the open market.

Building wealth—or borrowing against it?

For decades, homeownership has been synonymous with wealth creation. But as borrowing against equity becomes more common, that long-standing formula is starting to shift from “equity as wealth” to “equity as liquidity.”

While 68% of homeowners still see their property as a generational financial strategy, the survey found, rising debt and stagnant wage growth are testing how sustainable that vision really is.

“It alters how people accumulate wealth by slowing mobility and transforming equity from a safety blanket into a financial tool,” explains Epps.

Used responsibly, home equity can stabilize household finances and open new pathways for investment. But used too often, it risks eroding the very wealth homeowners spent years building—turning a safety net into a source of vulnerability.

Or, as Fortune warns: “An equity-first mindset only works with a home that keeps building equity. I think we are moving into a period when people will not trust real estate to build wealth until it starts to appreciate again. No one knows when that will happen.”