Last updated: November 2025
Quick Answer
To build home equity fast, even in a high-rate market, focus on extra principal payments, biweekly mortgage schedules, and smart home renovations. VA loan borrowers can accelerate equity through energy-efficient upgrades, avoiding PMI, and tapping unique refinance options.
Why building equity matters more in a high-rate market
When interest rates are high, your monthly mortgage payment sends more money to interest and less toward your loan balance. This slows down equity growth, making it harder for homeowners to build wealth through real estate.
But building equity isn’t just about time. It’s also about strategy. Whether you’re a new homeowner or using a VA loan, the right tactics can speed up your progress, even in a rising-rate environment.
Let’s Build Your Path to Homeownership
At Salute Mortgage, we combine veteran-led guidance with clear, tactical support—whether you're buying your first home, refinancing, or planning for long-term equity.
What is home equity?
As your mortgage balance goes down and your home value growth increases over time, you create a wider equity cushion that you can tap through refinancing or selling.
For example:
- Home value: $400,000
- Mortgage balance: $310,000
- Home equity: $90,000
Equity provides financial flexibility for refinancing, home equity lines of credit (HELOCs), or selling for profit. The faster you build it, the more financial options you gain.
1. Make extra principal payments
One of the fastest ways to build home equity is by making extra payments that go directly toward your loan’s principal, not the interest.
These small but consistent extra payments are among the most effective tactics for accelerating mortgage payoff—reducing your loan term and building equity faster.
How to do it:
- Add a fixed amount each month labeled “principal only”
- Make one extra full payment annually
- Round up your monthly payment to the next hundred
Even small increases can shave years off your loan and add thousands to your equity.
Example: On a $300,000 loan at 7% interest, adding $200/month toward principal could build over $30,000 in equity and cut five years off a 30-year term.
2. Switch to biweekly mortgage payments
A biweekly payment plan splits your monthly mortgage in half and pays it every two weeks. Since there are 26 half-payments per year, this results in 13 full payments annually instead of 12.
Benefits:
- One extra payment per year without changing your monthly budget
- Faster principal reduction
- Significant interest savings over the life of the loan
This method steadily and automatically increases equity, which is why many lenders offer a biweekly option. Make sure your lender applies the extra payment to principal, not future interest.
3. Invest in smart renovations
Prioritize upgrades that deliver the best equity ROI strategies—projects like kitchen updates or energy-efficient HVAC systems often increase appraised value more than their cost.
High-ROI projects include:
- Kitchen remodeling
- Bathroom updates
- Energy-efficient upgrades (insulation, windows, HVAC)
- Garage door replacement
- Adding curb appeal (landscaping, exterior paint)
Not all renovations are equal. Focus on projects that align with your local real estate market and have proven resale value. Avoid luxury upgrades with limited buyer appeal.
Tip: Track costs and keep receipts. Updated features add value only when well-documented during a future appraisal or sale.
4. Take advantage of VA loan equity benefits
If you’re eligible for a VA loan, you have unique advantages that help build equity faster compared to other loan types.
Equity-friendly VA features:
- No private mortgage insurance (PMI): Conventional loans often require PMI with less than 20% down (VA loans skip this cost entirely, letting more of your monthly payment reduce principal)
- Low closing costs and rates: VA loans often have better terms, including low closing costs and rates, meaning more of your money goes toward equity from day one
- Energy-efficient mortgage (EEM) option: VA loans can include financing for energy-saving improvements, which raise your home’s value while keeping your loan affordable
- IRRRL (VA streamline refinance): If rates drop, you can refinance with minimal paperwork and no appraisal, preserving equity while lowering interest
For veterans, leveraging these features can significantly accelerate equity without increasing monthly expenses.
5. Avoid or reduce mortgage insurance
Private mortgage insurance (PMI) does not help you build equity. PMI is a cost that protects the lender. If you’re using a conventional loan and didn’t put 20% down, you’re likely paying PMI.
Strategies to eliminate PMI faster:
- Make extra payments to reach 20% equity sooner
- Request PMI removal once your loan reaches 78% of the original value
- Refinance to a loan with a lower LTV (loan-to-value ratio)
VA loans don’t require PMI, which is a major reason why VA borrowers often build equity more efficiently.
6. Time your home improvements for market impact
Making improvements during a hot market can amplify your equity gains. A renovation that increases home value by $25,000 during a time of rising prices could result in $40,000 or more in equity growth when appraised or listed.
Best timing:
- Just before listing your home
- During a refinance or cash-out refinance
- When comparable homes in your area are selling for higher prices
Combining home appreciation with renovation ROI compounds your equity growth.
7. Recast your mortgage after a large payment
Some lenders allow mortgage recasting, where you make a lump-sum payment and ask them to recalculate your loan based on the lower balance. This reduces your monthly payment and increases equity faster, without refinancing.
Key points:
- Only available on conventional loans (VA loans don’t offer recasting)
- Not all lenders allow it, so make sure you ask first
- Keeps your original interest rate and term
This is useful if you receive a windfall (bonus, inheritance, etc.) and want to reduce debt efficiently.
Equity growth is strategy—not just time
Many homeowners assume equity grows automatically over time. While that’s partly true, interest-heavy early payments and rising mortgage rates can delay that progress.
By using intentional strategies such as extra payments, smart upgrades, and VA-specific tools, you can take control of your equity growth, regardless of market conditions.
Want help running the numbers?
Whether you’re using a VA loan or a conventional mortgage, building equity fast is about understanding your options. From small monthly tweaks to bigger renovation moves, the right strategy puts your home’s value to work for you.
Ready to Build Equity Faster?
Whether you’re just starting or already own, we can help you run the numbers on faster payoff strategies and smart upgrades.
Talk to a VA-savvy loan team that knows how to turn your mortgage into momentum. Let’s build your equity plan.
FAQs: How to build home equity fast
A: Take advantage of no PMI, low interest rates, and energy-efficient upgrades. Making extra principal payments and using the VA IRRRL refinance can also help.
A: Yes. Biweekly payments result in one extra full payment each year, which reduces your loan balance faster and builds equity more quickly.
A: Kitchen updates, bathroom remodeling, and energy-efficient improvements typically offer the highest ROI and increase appraised value.
A: Yes. You can build equity through appreciation, extra payments, and smart home improvements, even without a large initial investment.
A: Recasting lowers your balance and payment without changing your interest rate, while refinancing may offer better rates but resets your loan. Both can be effective depending on your goals.
