The housing market headlines for 2026 tell one story. The data tells another — and franchise investors should be paying attention.
The Headlines: A “Reset Year”
Economists are calling 2026 a reset, not a rebound. Redfin, Zillow, NAR, and Bright MLS all project modest improvements: existing home sales up 3-14% depending on who you ask, mortgage rates holding in the low-to-mid 6% range, and home prices rising 1-4% nationally.
“While lower mortgage rates and more inventory will bring some buyers back, this will be a reset year, not a rebound year,” said Lisa Sturtevant, chief economist at Bright MLS.
For prospective homebuyers, that’s cautiously optimistic news. But for prospective franchise owners, the real story is buried in a different data set entirely.
The Real Story: $11.6 Trillion Sitting on the Sidelines
While housing transactions remain sluggish, American homeowners are sitting on record wealth. According to ICE Mortgage Technology’s August 2025 Mortgage Monitor report, U.S. homeowners entered Q3 2025 with $17.8 trillion in total home equity — an all-time high.
Of that, $11.6 trillion is considered “tappable” equity, meaning homeowners can access it while still maintaining a 20% equity cushion in their property.
Here’s what that looks like in practical terms:
- 48 million mortgage holders have tappable equity
- The average homeowner has $213,000 in accessible value
- Homeowners tapped just 0.41% of available equity in Q1 2025
- 25% of homeowners say they’re considering a home equity line of credit in the next year
That last number is significant. One in four homeowners is actively thinking about accessing their equity. And with home equity line of credit rates around 8% — compared to 21% for credit cards and 13% for personal loans — it’s the cheapest money most people can access.
What This Means for Franchise Investment
The franchise industry has a funding problem that isn’t talked about enough. Ask ten aspiring franchise owners how they plan to fund their investment, and you’ll hear the same handful of options — each with significant drawbacks.
Personal savings is the cleanest path but requires years of accumulation. Most Americans don’t have $150,000-$400,000 sitting in a checking account waiting to be deployed.
SBA loans are the gold standard for franchise financing, offering competitive rates and longer repayment terms. But the application process is rigorous, approval can take 60-90 days, and many first-time business owners get denied. Banks want to see experience, collateral, and a strong credit profile.
401(k) rollovers (ROBS) allow entrepreneurs to use retirement funds to buy a franchise without early withdrawal penalties. It’s a legitimate strategy — but you’re betting your retirement on a business. If the franchise fails, that money is gone. No do-overs.
Franchisor financing exists but is limited. Some brands offer partial financing or payment plans, but most expect franchisees to arrive with capital in hand.
Friends and family is common but complicated. Mixing personal relationships with business obligations creates stress regardless of how the venture performs.
Credit cards and personal loans carry interest rates of 13-21% — expensive money that eats into margins from day one.
What’s missing from this list? The $11.6 trillion sitting in American homes.
A home equity line of credit (HELOC) allows homeowners to borrow against their property’s equity at rates currently around 8% — significantly cheaper than personal loans or credit cards, and without liquidating retirement accounts.
Consider the math:
- Average tappable home equity: $213,000
- Average franchise investment range: $100,000-$350,000
- HELOC interest rate: ~8%
- Draw period: 5-10 years (interest-only payments available)
For a homeowner with average equity, funding a mid-range franchise investment through a home equity line of credit is not only possible — it may be the most cost-effective path available. Yet it remains one of the least discussed options in franchise funding conversations.
Why 2026 Timing Matters
Several factors are converging to make 2026 a potential inflection point for franchise investment funded by home equity:
Equity levels are stable. Unlike 2008, today’s homeowners have strong equity positions. Mortgage delinquencies are at historic lows, and most homeowners locked in rates under 5%. They’re not underwater — they’re flush.
Home equity borrowing rates are dropping. The spread between home equity line of credit rates and prime has fallen to its lowest level since 2022. As the Fed continues its rate-cutting cycle, borrowing costs will continue declining, making equity access even cheaper.
Pent-up demand is real. Years of economic uncertainty have kept would-be entrepreneurs on the sidelines. The combination of stable home values, improving rates, and clearer economic visibility could unlock that demand in 2026.
Housing isn’t the only path to wealth anymore. With home price appreciation slowing to 1-2% annually, homeowners seeking better returns may look to redeploy their equity into income-producing assets — like franchise businesses.
Which Franchise Categories Benefit Most
Not all franchise investments align equally well with home equity funding. The sweet spot: concepts where total investment falls within typical tappable equity ranges and where the business model supports loan repayment within the draw period.
Strong alignment:
- Home-based and mobile franchises ($75K-$150K investment)
- Service franchises with quick ramp-up ($100K-$200K investment)
- Single-unit food concepts with proven unit economics ($200K-$350K investment)
Weaker alignment:
- Multi-unit commitments requiring $500K+ capital
- Concepts with extended ramp-up periods (18+ months to profitability)
- High-overhead brick-and-mortar with uncertain cash flow timing
The key question: Can the franchise generate sufficient cash flow to cover interest payments during the draw period while building toward profitability? If yes, home equity funding makes sense. If the model requires years of losses before turning positive, alternative funding structures may be more appropriate.
The Risks Are Real
Using home equity to fund a franchise isn’t without risk. Your home is collateral. If the business fails and you can’t make loan payments, foreclosure is possible.
Smart safeguards include:
- Maintaining 6-12 months of loan payments in reserve
- Choosing franchise concepts with strong Item 19 financial performance data
- Conducting thorough due diligence on unit-level economics
- Working with a franchise consultant who understands funding structures
The goal isn’t to bet your house on a business. It’s to strategically deploy an underutilized asset into an income-producing investment with eyes wide open about the risks.
The Bottom Line
The 2026 housing market may be a “reset year” for homebuyers and sellers. But for franchise investors, it could be an activation year.
Record home equity levels, declining borrowing rates, and stabilizing economic conditions create a window where funding a franchise through home equity is more accessible and affordable than it’s been in years.
The $11.6 trillion sitting in American homes isn’t going anywhere. The question is whether it stays parked — or gets put to work.
Ready to explore franchise opportunities that align with your investment capacity? Browse franchise profiles at America’s Best Franchises to find concepts matching your goals and funding.
