The Typical Family With Debt Owes 26.9% of What It Owns, and That Share Has Been Falling Since 2013
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
It could be said that debt feels different depending on what you measure it against. If you put a mortgage next to the house it bought, it can look manageable. However, if you put it next to the paycheck that has to cover it every month, it can look a lot bigger. The Federal Reserve’s 2025 Survey of Consumer Finances measured American household debt both ways, and the gap between those two views explains where families really stand, especially as they get close to retirement.
What a Leverage Ratio Actually Measures
Here’s the plain version of a leverage ratio. Add up everything a family owes, divide it by everything the family owns, and you get the share of its stuff that’s effectively still owed to lenders. For families carrying any debt, the Fed found the median leverage ratio was 26.9% in 2025. The Fed describes it as “a family’s total debt relative to its total assets”.
Median means the family sitting right in the middle, with half above and half below. Picture ten families that each owe a small piece of what they own, then add one household that’s deeply underwater. The average jumps, but the median barely moves. So the median gives a cleaner picture of the typical indebted household.
A Ratio That’s Fallen in Every Survey Since 2013
The median leverage ratio for debtors has dropped in each survey the Fed has run since 2013:
- 2013: 38.6%
- 2016: 36.4%
- 2019: 33.9%
- 2022: 29.2%
- 2025: 26.9%
Most of that decline came from the asset side. Strong stock market performance and rising house values boosted family assets, according to the Fed. The S&P Cotality Case-Shiller national home price index rose from 184 in November 2016 to 337 in August 2026. Families didn’t have to do anything for that gain to show up.
A family owing $100,000 against $400,000 in assets has a ratio of 25%. If the house appreciates and total assets reach $500,000 while the debt stays put, the ratio falls to 20%. Same loans, same payments, better-looking number.
Why Debt Looks Heavier Against a Paycheck
The Fed puts it directly: “Borrowers look less financially fragile when their debts are scaled to their assets rather than to their income.” The median debt-to-income ratio for debtors was 94.8 in 2025, about unchanged since 2022. In other words, the typical indebted family owes close to a full year of income, and that hasn’t shifted lately.
Monthly payments tell a harder story, as the median share of income going to debt payments rose to 15.4%, up 2.0 percentage points from 2022, which the Fed links to higher interest rates. Families spending more than 40% of income on debt payments rose from 6.5% to 8.6%. With card balances charging an average 21% APR, carried debt remains expensive no matter what a house is worth.
Why Income Matters Most Once the Paychecks Stop
Older households look nearly debt-free on an asset basis. Using the Fed’s Distributional Financial Accounts for the second quarter of 2026, total liabilities as a share of total assets across all households by age come out to:
- Under 40: 31.4%
- 40 to 54: 17.4%
- 55 to 69: 6.2%
- 70 and older: 3.5%
Those are group totals, which explains why they run lower than the Fed’s median for debtors. Even so, mortgage debt is moving older. Households 70 and up held 5.7% of home mortgage debt in early 2013 and 11% by mid-2026.
A retiree can’t make a mortgage payment with home equity unless they sell or borrow against it. The Fed says that families “may have money tied in illiquid assets that may not easily be drawn down to finance debts.” Once wages stop, every payment comes out of Social Security, pensions, or account withdrawals, so a low leverage ratio can sit right alongside a tight monthly budget.
That income-side pressure is why we made the case against the old 4% withdrawal rule, and outlined an income-first alternative, in a free guide here.
How to Figure Your Own Ratio
Calculating your own ratio should take about an hour, and you just need a recent statement for every account. Start with the debt side, then the asset side:
- List every balance owed: mortgage, home equity line, car loans, student loans, and credit cards.
- List what you own at realistic values: the home, retirement and investment accounts, savings, and vehicles.
- Divide total debt by total assets to get the leverage ratio.
- Then divide monthly debt payments by monthly gross income, since that’s the measure the Fed shows rising.
Track This One Number Every Year
Total debt divided by total assets is the single figure worth recording every year, along with whether it’s falling. Pay attention to why it moved. A drop driven by smaller balances is yours to keep. A drop driven by a hot housing or stock market can reverse, and home prices already slipped 0.2% in the latest monthly reading. Heading into retirement, a falling ratio backed by falling debt is what actually keeps monthly bills manageable.
Contact [email protected] for any questions or corrections.
David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
