The bigger your down payment, the more equity you'll immediately have in your home. Say you buy a home for $400,000. If you put down 5%, or $20,000 - you'll owe $380,000 on your mortgage/principal. In this example, you'd start with $20,000 in equity!

The principal is the balance of your loan. As you make mortgage payments, a certain portion of those payments go directly to principal. As you contribute to principal, this raises equity in the property. You are also able to make extra principal payments monthly, yearly, or at your own discretion.

Appreciation is the amount that your property increases in value. There are several factors that have an impact on home appreciation, including interest rates, the economy, supply and demand, local market conditions, and property specifics. Home prices have increased for 12 consecutive years. In 2021, home value increased by over 18 percent - the highest jump on record.