Should You Sell Your House to Pay Off Debt?

Getting out of debt is tough. It takes a lot of work to clean up a financial mess—from working extra jobs to eating beans and rice to keep your living costs down. You can make even more progress by selling so much stuff the kids think they’re next!

But does selling everything include selling your home?

Selling your home is an expensive undertaking, both financially and emotionally. Most people shouldn’t sell their home to pay off debt. Let’s walk through the details on when it works and when it doesn’t.

Selling your home is an expensive undertaking, both financially and emotionally. Most people shouldn’t sell their home to pay off debt. Let’s walk through the details on when it works and when it doesn’t.

Should You Sell Your House to Pay Off Debt?

In most cases, no. Only consider selling your house if your mortgage is too expensive or you were already planning to move.

Here’s a quick way to think about it:

Bottom line: If your mortgage isn’t the issue, selling your house won’t solve your debt problem.

Should You Sell Your House Before Trying Other Debt Strategies?

Depending on how big your debt is, it’s true that the proceeds from a home sale will probably take a huge bite out of it—or even pay it off. That sounds great!

However, because selling your home is such a huge (and expensive) process, it’s not something to go into on a whim. That’s why, when it comes to paying off debt, you should knock out all the alternatives before considering selling your house.

At Ramsey Solutions, we’ve helped thousands of people get out of debt without selling their homes. The secret? Get serious about budgeting and boosting your income.

Here’s a checklist of all the options you need to try before you even think about selling your house:

• Cut expenses down to the bare minimum.
• Increase your income (side job, overtime, etc.).
• Sell anything you don’t need.
• Follow a strict, written budget.
• Pause your retirement investing for a season.
• Throw every extra dollar at your debt—while keeping just a $1,000 starter emergency fund.
• Stick with your debt payoff plan for several months.

If you’ve tried all those options, given them time to work, and still want (or need) to put more money toward your debt, selling your home might be a good move. But even then, there are only two situations where it makes sense: your mortgage is too expensive or you’re already planning to move.

How Do You Know if Your Mortgage Is Too Expensive?

Ideally, your mortgage payment should be no more than 25% of your monthly take-home pay. According to Ramsey Solutions’ 2025 Real Estate Report, the median mortgage payment in the U.S. is $1,500. That means you’d need to bring home $72,000 to afford it.

If half of your income gets swallowed up by your mortgage every month, it’s a no-brainer—there’s nothing left to throw at debt. Cutting your housing budget down to size is the only way you’ll ever make progress.

Let’s look at an example.

Frank and Sheryl Smith bring home $4,900 a month and owe $40,000 in student loans. Their mortgage costs $2,200 a month—a whopping 45% of their take-home pay. At this rate, they can only afford to put $350 a month toward their student loan debt.

So, the Smiths decide it’s time to sell their home with a real estate agent. Because they hadn’t built up very much equity (that’s the home’s market value minus the remaining mortgage balance) in the short time they were in their house, the Smiths make $20,000 off the sale when all is said and done. And that chunk of money goes directly toward their student loan balance.

Frank and Sheryl don’t have any cash to put down on a new home. Going back to renting isn’t ideal, but it’s worth a temporary sacrifice to get their finances back on track. The Smiths find a place to rent for $1,700 a month. That budget change enables them to add an extra $500 to their student loan payment each month.

Instead of taking more than a decade to pay off debt, the Smiths are on track to kick Sallie Mae to the curb in just 24 months. And that’s not even counting any raises they get or temporary increases in income from side gigs and selling stuff. Not to mention the interest they’ll be saving on that loan by paying it off earlier.

Does Selling to Pay Off Debt Make Sense if You’re Already Planning to Move?

It’s true that your home holds a lot of emotional value. There’s no need to make a drastic move if you love your home and your mortgage payment isn’t holding you back. Like we said earlier, just tighten up spending in other areas and focus on attacking that debt. You can find other ways to turbocharge your progress without uprooting your family.

But if selling your home was already on your to-do list, there’s an important question to consider: Will it help or hurt your money situation? To find the answer for our new (hypothetical) friends, Danny and Michelle Cooper, we’ll need to do a little math.

• First, let’s figure out whether the Coopers’ home is worth more than they owe. We can do that by subtracting their mortgage balance from their home’s market value. For instance, if they owe $250,000 on their home and it’s worth $450,000, they’d have $200,000 in equity.

• Next, estimate their agent commission and closing costs. Agent commissions are negotiable but often range from about 3–6% of the home’s sale price. On top of that, closing costs—like title insurance and prorated interest and taxes—can total 2–7%, according to the National Association of REALTORS^® (NAR).¹ For our example, we’ll deduct $31,500 for these costs, leaving Danny and Michelle with $168,500.

• Before they can go out and spring for a new home, let’s make sure they can afford it. We recommend putting at least 20% down on a 15-year fixed-rate mortgage (5–10% down for first-time home buyers). Remember not to spend more than a quarter of your income on your mortgage each month.

Now let’s see how far $168,500 could go for the Coopers if they owe $40,000 in debt and want to downsize their home. And while they’re at it, why not use that chunk of change to power through their next Ramsey Baby Steps to financial peace in one fell swoop? They could:

• Knock consumer debt down to zero

• Build up their emergency fund (3–6 months of expenses)

• Put 20% down on a $400,000 home—paying about $3,000 a month on a 15-year mortgage

Of course, everyone’s financial situation is different. What works for the Coopers may not work for you. That’s why it’s important to crunch your own numbers before making a big decision like selling your home.

How to Sell Your House the Right Way (if You Decide To)

If you’ve decided that selling your home is your best option for getting out of debt and need more info about the process, start with our free Home Sellers Guide. It’ll give you tips on everything from finding the right real estate agent to planning a competitive pricing strategy. And did we mention that it’s totally free?

When it comes time to actually look into selling, you’re going to need someone by your side to guide you through the process—and that’s where an experienced real estate agent comes in. For starters, you can ask a local agent to provide a comparative market analysis (CMA). This free report will show you what recent buyers have paid for homes like yours in your area. That way, you can feel confident you have enough equity to make moving worth your while.

But we’re not talking about just any real estate agent. Find a top agent we’ve vetted through RamseyTrusted^®. Selling your home is a big deal—emotionally and financially. A RamseyTrusted agent will genuinely care—and give you the information and service you need to make a successful sale.

Frequently Asked Questions