A house can be worth less than its purchase price and still have positive equity. Purchase-price change compares two property values. Equity compares the home's current value with the outstanding debt secured by it. The original down payment and later principal repayment can make the results very different.
That distinction matters when reading RateZip's home-value movers. Its since-purchase view compares tracked value estimates with purchase prices for a defined property cohort. It does not have the current loan balances needed to establish whether each property has negative mortgage equity. “Below purchase price” must therefore not be relabeled as “underwater.”
One price decline, three debt positions
Consider three hypothetical purchases at $400,000, each financed with a fully amortizing 30-year mortgage at 6.00%. After exactly 36 scheduled monthly payments, assume each home is worth $380,000, a 5% decline from purchase. There are no extra principal payments, missed payments, additional liens or financed fees in this illustration.
| Original down payment | Original loan | Mortgage balance after 36 payments | Value minus mortgage balance |
|---|---|---|---|
| 3.5% | $386,000.00 | $370,884.51 | $9,115.49 |
| 10% | $360,000.00 | $345,902.65 | $34,097.35 |
| 20% | $320,000.00 | $307,469.02 | $72,530.98 |
RateZip amortization calculations, rounded to cents. The 6.00% rate is an assumption, not a current offer. Payment calculations exclude taxes, insurance, mortgage insurance and other ownership costs. Those costs still affect household cash flow.
Every home in the example is below its purchase price. The borrowers nevertheless have different equity positions because they began with different debts. Any second mortgage or HELOC balance would also need to be subtracted to measure total secured debt.
Positive equity is not the same as cash available after selling
The final column is an accounting comparison before selling expenses. Brokerage costs, transfer charges, repairs and other transaction costs can reduce proceeds. A homeowner with a small positive equity amount might have little or no cash left after a sale. Conversely, a property-value estimate is not a sale price or an appraisal and can differ from what a buyer actually pays.
The distinction also runs the other way. A home can appreciate from its purchase price while additional borrowing leaves the owner with little equity. Purchase history alone cannot identify that situation.
Read the cohort before drawing a national conclusion
RateZip's published since-purchase snapshot is dated September 1, 2026, and concerns tracked properties purchased from January 2022 onward. Its sample and observation window are part of the measure. It is not a census of all owners, and the location aggregates should not be read as a nationally representative estimate of negative equity.
The right interpretation is limited to the question the data can answer: how tracked estimates compare with recorded purchase prices. To answer whether an individual homeowner is underwater, use a defensible current value and the actual balances of every loan secured by the property.
RateZip is operated by Peklava LLC, DBA RateZip, a licensed mortgage broker (NMLS ID 1592292). We are compensated by some of the partners shown, which may affect which offers appear and where. It does not affect our reporting or recommendations. See our editorial standards.