Worked Numbers
Net Worth Calculator: How to Calculate Net Worth, With a Mortgage
To calculate net worth, add up what everything you own would sell for today, add up what you owe today, and subtract the second total from the first. In the illustrative household below, $558,000 of assets minus $303,200 of liabilities is a net worth of $254,800. A mortgage goes in as two lines - the home at its value on the asset side, the mortgage balance on the debt side - and the difference between them is your home equity.
The net worth formula
Net worth = total assets - total liabilities
- Assets are things you could turn into money: cash, investments, retirement accounts, your home, vehicles. Value each one at what a buyer would pay for it today, not what you paid.
- Liabilities are balances you owe today: mortgage, car loans, student loans, credit cards. Use the payoff balance, not the monthly payment.
That is the whole calculation. The arithmetic is one subtraction; the work, and every way of getting it wrong, is in the values you type in.
How to calculate net worth: a worked example
These figures are illustrative, not typical or recommended. Swap in your own.
| What you own | Value today |
|---|---|
| Cash: checking and savings | $18,000 |
| Investments outside retirement | $42,000 |
| Retirement accounts | $96,000 |
| Home, at what it would sell for | $380,000 |
| Vehicles | $22,000 |
| Total assets | $558,000 |
| What you owe | Balance today |
|---|---|
| Mortgage balance | $265,000 |
| Car loan | $14,000 |
| Student loans | $21,000 |
| Credit cards | $3,200 |
| Total liabilities | $303,200 |
Net worth = $558,000 - $303,200 = $254,800.
How to calculate net worth with a mortgage
There are two equivalent ways to handle a house with a loan on it.
Gross: list the home at $380,000 as an asset and the mortgage at $265,000 as a liability, as in the tables above.
Net: list only the equity, $380,000 - $265,000 = $115,000, as an asset, and leave the mortgage off the debt list. Everything else you own comes to $178,000 and everything else you owe to $38,200, so net worth is $178,000 - $38,200 + $115,000 = $254,800. Same answer.
The gross version is better for tracking because it shows both moving parts: the mortgage balance falling as you pay it, and the home’s estimated value moving on its own. The net version is easier to read at a glance.
The one combination that does not work is counting the home but not the mortgage. On this example that reports $519,800, overstating net worth by $265,000 - the entire mortgage balance. A related slip is entering the monthly mortgage payment instead of the balance; the balance is what you owe.
The house decides the answer
Here is the part a one-line net worth calculator leaves out. On this example, home equity is 45% of net worth, so how you treat the house moves the number by tens of thousands of dollars. Three defensible versions of the same household:
| How the house is counted | Net worth |
|---|---|
| At full estimated value | $254,800 |
| Net of selling costs (7%, an illustrative figure) | $228,200 |
| Left out entirely | $139,800 |
Selling costs alone take $26,600 off the equity: if you sold at that estimate, the check you received would be $88,400, not $115,000. And leaving the house out is a reasonable choice if you will always need somewhere to live - the money in it cannot be spent without buying or renting something else.
None of the three is the correct one. What matters is picking one and using it every time, because a net worth figure is most useful as a trend, and a trend built on a method that changes between snapshots measures the method.
Two more cuts of the same number
Liquid net worth. Of the $558,000 this household owns, only $60,000 (cash plus non-retirement investments) is money it could reach within weeks without selling a house, a car or a retirement account. That is 11% of its assets. Subtract the $3,200 of card debt that would be cleared first and liquid net worth is $56,800. A large net worth and a thin cushion can be the same household.
Debt-to-asset ratio. Total liabilities divided by total assets is 54.3% here. Take the house and mortgage out of both sides and it drops to 21.5%, which tells you the mortgage is what makes this balance sheet look stretched, not the car or the cards.
Did you save it, or did the market?
Run the calculation again later and the change splits into two sources. 12 months earlier this household’s net worth was $221,600, so it rose $33,200. But only $10,800 of that was money it saved or used to pay down debt. The other $22,400 came from values moving - investment prices, a new estimate for the house, a car losing value - and values can move back.
If you want to know whether your habits are working, subtract what you put in from the change. That row tells you something the headline number cannot.
A net worth calculator spreadsheet: what it needs
If you build your own, the structure is short:
- One row per asset, valued at what it would sell for today.
- One row per debt, at today’s payoff balance.
- A total for each column and a net worth cell: total assets minus total liabilities.
- A column per snapshot date, so you can subtract one from the next.
- A note at the top saying how you value the house and whether retirement accounts count as liquid - so future you uses the same rules.
Update it on a fixed schedule, such as monthly or quarterly, so each change covers the same length of time.
How these were calculated
Every figure on this page comes from the worked household in The Net Worth Calculator Pack. The pack declares each sheet’s inputs and the value each output should produce; this page’s check reads those inputs, recomputes every total, ratio and difference independently from the definitions above, and the page does not build unless the two agree. All values, including the selling-cost percentage, are illustrative examples, not estimates of what any real home, account or household is worth. Taxes on selling investments or withdrawing retirement money are not deducted. This is arithmetic, not financial, tax or investment advice.
To run the same calculations on your own numbers - the snapshot, liquid net worth, debt-to-asset ratio, home equity counted three ways, change between snapshots, and a projection - the pack does it in 8 linked spreadsheet calculators: