The short answer: Yes, but… 

Let’s cut to the chase – yes, a mortgage is considered debt. But (and it’s a big but) it’s not quite the same as maxing out your credit cards on a shopping spree. A mortgage is what financial folks call “good debt” – which sounds like an oxymoron, so let’s explain why your mortgage might be the best debt you ever take on. 

What makes a mortgage debt? 

At its core, a mortgage is a loan. You’re borrowing a large sum of money from a lender, and you’ve agreed to pay it back over time, usually with interest. That’s pretty much the textbook definition of debt. Here’s why it checks all the debt boxes: 

• You owe money: Yep, that big number on your mortgage statement? That’s what you owe. 

• You’re obligated to repay: Those monthly payments aren’t optional. 

• There’s interest involved: The bank isn’t lending you money out of the goodness of their heart. 

• There are consequences for not paying: Miss too many payments, and you could face foreclosure. 

So, why is it called “good debt”? 

Now that we’ve established that a mortgage is indeed debt, let’s talk about why it’s often considered “good debt.” In a nutshell: 

• You’re building equity: Unlike renting, where your money goes into your landlord’s pocket, your mortgage payments are building your own wealth. As you pay down your mortgage, you own more and more of your home. 

• Homes typically appreciate: While there are no guarantees in real estate, homes generally increase in value over time. This means your investment is likely to grow. 

• Tax benefits: In many cases, you can deduct your mortgage interest on your taxes. (Always check with a tax professional, though!) 

• Lower interest rates: Compared to credit cards or personal loans, mortgages usually have much lower interest rates. 

• It’s a necessity: Everyone needs a place to live. If you’re going to pay for housing anyway, why not build equity while you’re at it? 

• Forced savings: A mortgage is like a forced savings plan. Each payment increases your net worth a little bit. 

The flip side: When a mortgage feels like bad debt 

Of course, mortgages aren’t all perks. Sometimes, they can feel like a heavy burden. Here’s when your mortgage might feel more like “bad debt”: 

• If you bought more house than you can afford: Those monthly payments can really pinch if they’re eating up too much of your income. 

• During a housing market downturn: If home values drop significantly, you could end up “underwater” on your mortgage, owing more than your home is worth. 

• If you have an adjustable-rate mortgage and interest rates spike: Suddenly, your affordable payment might not be so affordable anymore. 

• When unexpected life changes happen: Job loss, divorce, or health issues can make those mortgage payments feel pretty daunting. 

How a mortgage fits into your financial life 

So, we’ve established that a mortgage is debt, but it’s often good debt. How does this affect your overall financial picture? Here are a few things to consider: 

• Debt-to-income ratio: Lenders look at your debt-to-income ratio when you apply for loans. A mortgage is part of this calculation, but it’s viewed more favorably than other types of debt. 

• Credit score: Paying your mortgage on time can boost your credit score. It shows you can handle long-term financial commitments. 

• Net worth: Your home is an asset. As you pay down your mortgage and your home (hopefully) appreciates, your net worth grows. 

• Financial planning: A mortgage is a long-term commitment that needs to be factored into your overall financial plan, from budgeting to retirement planning. 

The bottom line 

At the end of the day, yes, your mortgage is debt. But it’s debt with a purpose. It’s helping you build wealth, providing you with a place to live, and potentially offering tax benefits. That said, it’s crucial to approach your mortgage wisely: 

• Buy within your means: Don’t stretch yourself too thin. 

• Shop around for the best rates and terms. 

• Consider making extra payments, if you can, to build equity faster and reduce the overall interest you’ll pay. 

• Keep an eye on your home’s value and refinance if it makes sense. 

You now know that while a mortgage is technically debt, it’s also an investment in your future, a path to homeownership, and potentially one of the smartest financial moves you’ll ever make. Just remember to borrow responsibly, and happy house hunting!