U.S. Household Debt Hit $18.2 Trillion: What Homeowners Should Actually Do About It

$18.2 trillion. That’s how much Americans collectively owe as of 2025, according to the New York Fed. It’s a record. And 70% of it—roughly $12.7 trillion—is mortgage debt.

That number is abstract until it isn’t. Until it’s your number. Until your mortgage plus your credit cards plus your car payment adds up to a monthly obligation that makes your stomach hurt every time you open your bank app.

If you’re wondering whether you should sell your house to pay off debt—you’re not alone, and you’re not wrong to be thinking about it. Your home equity might be the single most powerful tool you have to reset your financial life.

Let’s look at what’s actually happening, when selling makes sense, and five real options for using your equity to tackle debt.

➤ Compare equity access options side-by-side

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The Debt Picture: What the Numbers Mean for You

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The $18.2 trillion headline breaks down like this:

• Mortgage debt: ~$12.7 trillion (70%)
• Auto loans: ~$1.7 trillion
• Student loans: ~$1.6 trillion
• Credit card debt: ~$1.2 trillion (at 20%+ average interest)
• HELOCs and other: ~$1 trillion

Source: New York Fed Consumer Credit Panel / Equifax

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The Debt-to-Income Check

Trouble starts when total debt payments exceed 36% of gross monthly income. Above 43%, most lenders won’t approve new credit. Your financial options are shrinking every month.

🔗 4 signs it’s time to sell your house

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5 Ways to Use Home Equity to Tackle Debt

Option 1: HELOC

Borrow against equity at 7–9% vs. 20%+ credit card rates. Consolidate into one payment.

• Good for: 680+ credit, stable income, want to keep ownership
• Watch out: New debt secured by your home. Default = foreclosure risk.

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Option 2: Cash-Out Refinance

Replace your mortgage with a larger one and pocket the difference.

• Good for: Homeowners with high existing rates who need a lump sum
• Watch out: Resetting a 30-year clock. With rates near 7%, rarely makes sense. Closing costs 2–5%.

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Option 3: Traditional Home Sale

Sell on the open market, use proceeds to clear all debt, start fresh in a new place.

• Good for: Ready to downsize or relocate with significant equity
• Watch out: 60–90 days. Requires repairs, staging, showings. Agent commissions 5–6%.

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Option 4: Sale-Leaseback (Sell and Stay)

Built for homeowners who need their equity but can’t afford—or don’t want—to move. Sell to an investor at/near market value, lease it back, stay as a renter. Cash in 15–30 days. No new debt. No credit check.

• Good for: House-rich, cash-poor homeowners facing mounting debt
• Watch out: You give up ownership. Pay rent. Lease terms set by investor.

Programs from Truehold, Sell2Rent, and StayFrank.

🔗 Compare sell-and-stay programs

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Option 5: Government and Nonprofit Programs

• HUD-approved housing counseling: Free, confidential. Call 800-569-4287
• Loan modification: Lender restructures your mortgage
• Forbearance: Temporary pause of payments during hardship
• State hardship programs: Emergency mortgage assistance

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The Bottom Line

$18.2 trillion in household debt is a national number. Your number is what matters. If monthly debt payments consume more than a third of your income, it’s time to look at your home equity as a solution.

You’ve spent years building equity. If that equity can eliminate your debt and give you breathing room—that’s not giving up. That’s taking control.

➤ Compare equity access options including sell-and-stay programs

➤ Ready to see your options? Free, no obligation

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FAQ: Home Equity and Debt Relief

Should I sell my house to pay off credit card debt?

If credit card debt is compounding at 20%+ while your equity sits unused, selling (especially through a leaseback where you stay) can eliminate it entirely. Compare options.

What are alternatives to foreclosure?

Loan modification, forbearance, selling (traditional or leaseback), HUD counseling (800-569-4287), and state hardship programs. A sale-leaseback eliminates the mortgage while letting you stay.

Can I access equity without new debt?

Yes. A sale-leaseback lets you sell, get cash, and stay as a renter—zero loans, zero interest. Programs from Sell2Rent, Truehold, and StayFrank.

How much debt is too much?

Financial advisors flag concern above 36% DTI, and serious risk above 43%. If your combined payments cross these thresholds, explore your options.

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