Despite what the name might suggest, a homestead exemption isn’t some kind of dusty old prospector or settler law. Many states have these statutes on the books, which are designed to protect a primary residence from creditors in a bankruptcy filing.
For example, if a family files a Chapter 7 bankruptcy, the amount of equity they can protect with an exemption will be a determining factor in whether they’ll be able to keep their home.
In a Chapter 13 bankruptcy, the family won’t lose their home, but they’ll have to pay creditors an amount equal to the value of the property they can’t protect with an exemption or their disposable income, whichever is more.
Before declaring bankruptcy, it’s advisable to consider the alternatives.
Read more to find out how homestead exemptions relate to bankruptcy, state by state.
Table of Contents
- Key Points
- • Homestead exemptions are legal provisions that protect a homeowner’s primary residence from creditors during bankruptcy or the death of a spouse.
- • Not all states offer homestead exemptions.
- • The amount of equity protected varies significantly by state, with some offering unlimited protection and others setting specific caps.
- • Certain states allow the use of federal bankruptcy exemptions as an alternative to state-specific exemptions.
- • Homestead exemption rules are complex and vary widely, so it’s essential to consult local laws or authorities when considering bankruptcy protections.
What Is a Homestead Exemption?
If you’re wondering what a homestead exemption is, it’s a provision in a state’s law that can legally protect a home from creditors in situations such as declaring bankruptcy or the death of a homeowner’s spouse.
A homestead exemption can both literally provide you with shelter (a roof over your head) and financial protection to help you avoid losing your home. That said, this exemption won’t prevent foreclosure if you default on your mortgage.
You may be curious about the Homestead Act and whether it’s the same thing as a homestead exemption. They’re not: The Homestead Act was an 1862 law that granted 160 acres of Western land in the U.S. to anyone who promised to farm it. It was designed to encourage settlement in the West and drive economic growth.
What States Have a Homestead Exemption?
It’s easier to name the states that don’t have a homestead exemption than those that do, since the vast majority offer this protection.
Currently, the only states without specific homestead exemptions are New Jersey and Pennsylvania. If you live in one of these states, you likely have an idea of where you stand on potential protection with homestead exemptions — although other state and even federal homestead exemption provisions may potentially assist anyone, in any state.
If you live in any of the other 48 states, there are often more nuances to consider, depending on your situation and financial plans.
Even if you live in a state that offers homestead exemptions, instead of considering them, you may want to find ways to save money on your mortgage. Strategies such as refinancing a home loan or requesting a new tax assessment can help you weather financial storms by reducing your monthly payments.
Recommended: Understanding Bankruptcy: Is It Ever the Right Option?
Which State Has the Best Homestead Exemption?
It’s true that some states are more favorable than others for seeking this exemption. However, no state is the “best” for this. Many individual factors are worth weighing to assess what — and where — is advantageous.
Because homestead exemptions are protections for primary residences, you cannot claim an exemption on an investment property or vacation home.
Some states allow bankruptcy filers to use federal bankruptcy exemptions instead of the state exemptions.
The federal homestead exemption amount is calculated every three years. For the period from April 1, 2025, to March 31, 2028, it allows you to protect up to $31,575 of the equity in your home. In cases where you and your spouse file taxes separately, don’t live together, maintain separate homesteads, or (according to at least one court) don’t have a direct financial connection with each other, each of you can claim a separate homestead, up to the amount allowed per individual.
Also, most states allow a “wildcard” exemption, which allows you to protect any kind of property from bankruptcy proceedings. This can be of particular help if one or more of a debtor’s other exemptions falls short of protecting their equity. A wildcard exemption amount can be divided among multiple items.
As of April 1, 2025, the federal wildcard exemption is $1,675, plus up to $15,800 of any part of the federal homestead exemption that hasn’t been used.
Since there’s so much variability in local, regional, and state codes and how they define the homestead exemption, it’s wise to consult local authorities or websites detailing the law’s specifics when you’re in a situation that may trigger these laws.
Here’s a rundown of what are sometimes referred to as “homestead states,” those that offer some of the highest exemptions or greater flexibilities in the law. Other factors, such as cost of living, should also be a consideration:
1. California: California has two systems for the homestead exemption, one in which homeowners can exempt up to $743,681 of their home equity, and one in which they can exempt up to $36,750. Determining what you can access requires research and/or legal counsel.
2. Florida: Under the Florida exemption system, homeowners may exempt an unlimited amount of value in their home or other property covered by the homestead exemption. However, the property cannot be larger than half an acre in a municipality or 160 acres elsewhere. The exemption can also be claimed by the spouse or children of a deceased owner.
3. Iowa: An unlimited value in one home or a one-unit apartment can be sought in protection. The property must be in a city or town and is limited to one-half acre or 40 acres elsewhere.
4. Kansas: An unlimited value amount can be sought in protection, but the amount of land that homeowners can protect is limited. They can protect up to 1 acre of property if they live within city limits or up to 160 acres of farmland.
5. Minnesota: You can protect up to $510,000 of equity in your home and land or up to $1,275,000 of equity if your land (up to 160 acres) is used for agricultural purposes.
6. Oklahoma: Residents can exempt the entire value of their homes up to a half acre if it’s in a city, town, or village, or up to 160 acres if it’s elsewhere. (If you use more than 25% of the total square footage of your property for business, your exemption is limited to $5,000.)
7. Rhode Island: The exemption applies for up to $500,000 of equity.
8. South Dakota: If your home is less than one acre in a town or 160 acres in any other type of area, all of your equity is exempt.
9. Texas: For residences on 10 acres or less in a city, town, or village or up to 200 acres in the country, the state offers an unlimited homestead exemption for families.
10. Washington: This state’s generous homestead exemption varies depending on the county the homeowner lives in.
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Homestead Exemptions in Other States
Here are the homestead exemptions that the remaining states offer:
1. Alabama: The Alabama Department of Revenue indicates that at the state level, homestead exemptions have a maximum value of $18,800. It only applies on land area that’s not more than 160 acres.
2. Alaska: Homeowners may exempt up to $54,000 of their home or other property covered by the homestead exemption.
3. Arizona: Homeowners can exempt up to $437,600 for a house and the land it’s on, a cooperative or condominium, or a mobile home and the land it’s on, provided the homeowner lives in the dwelling.
4. Arkansas: You can seek an unlimited amount of equity in 80 rural acres or one-quarter of an urban acre.
5. Colorado: Up to $250,000 of equity in a home or other property, such as a mobile home, is protected. The amount increases to $350,000 if the homeowner, spouse, or dependent is disabled or 60 or older.
6. Connecticut: The state protects up to $250,000 of equity in real property, a co-op, or a manufactured home occupied at the time of filing bankruptcy.
7. Delaware: The state offers exemptions up to $200,000 in real property or a manufactured home that was used as a principal residence.
8. Georgia: Homeowners may exempt up to $21,500 of their home or other property covered by the exemption (the amount increases to $43,000 for married filers). They can also apply $10,000 of any unused portion of the exemption to another property they own — a “wildcard” exemption.
9. Hawaii: If you’re the head of a household or over 65, you can exempt up to $90,000 of equity. If you’re not the head, you may protect up to $90,000 of equity in your home.
10. Idaho: A filer can protect up to $175,000 in equity in a home or mobile home.
11. Illinois: You can protect up to $50,000 in equity in your home, which can be a farm, mobile home, lot with buildings, condominium, or cooperative.
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12. Indiana: A debtor can exempt up to $22,750 in real estate or personal property used as a residence. In addition, if you’re married and filing jointly, that figure rises to $45,500.
13. Kentucky: Up to $5,000 of equity can be claimed.
14. Louisiana: Homeowners are allowed to exempt up to $35,000 of home equity and more if their debts were due to a catastrophic or terminal illness or injury.
15. Maine: Up to $80,000 of equity in property used as a residence can be claimed. The amount can be increased to $160,000 in equity if you have a minor dependent residing with you or if you’re 60 or older or disabled.
16. Maryland: The state exempts residential property value up to $31,575 (the husband and wife may not double).
17. Massachusetts: The state automatically protects up to $125,000 in home equity and up to $1,000,000 for those who file and receive the increased exemption (this amount also applies to the elderly or disabled).
18. Michigan: Each homeowner and their dependents can exempt up to $46,125 in a property covered by the homestead exemption. If the homeowner is 65 or older or disabled, the exemption amount increases to $69,200.
19. Mississippi: You can claim an exemption of up to $75,000 of equity in the property you live in, as long as it’s less than 160 acres.
20. Missouri: You can exempt up to $15,000 of equity in the real estate in which you live or will live, and spouses who file a joint bankruptcy can double the exemption.
21. Montana: Up to $425,828 in equity can be protected for up to 320 farm acres, a quarter of a city acre, or one residential acre outside a municipality.
22. Nebraska: Up to $120,000 can be protected on a home, provided the owner is either a head of household, married, or over age 65 and the property doesn’t exceed 160 acres.
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23. Nevada: Up to $605,000 in equity in a home can be claimed.
24. New Hampshire: You can protect up to $400,000 in equity.
25. New Mexico: Up to $150,000 of equity in your home can be protected; this amount is double for spouses who co-own property.
26. New York: The homestead exemption amount varies greatly depending on the county. If the property is in the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam, the exemption is $204,825. If the property is in Dutchess, Albany, Columbia, Orange, Saratoga, or Ulster, the exemption amount is $170,700. For any other county in the state, the exemption amount is $102,400.
27. North Carolina: Homeowners may exempt up to $35,000 of their home or other personal property. Homeowners 65 or older whose spouse is deceased may exempt up to $60,000, provided the property was previously owned by the debtor as a tenant by the entirety or as a joint tenant with rights of survivorship.
28. North Dakota: Homeowners can protect up to $150,000 of equity in their home when declaring bankruptcy.
29. Ohio: The state allows for the protection of up to $182,625 of equity as part of the homestead exemption. Spouses who file a joint bankruptcy may double that amount.
30. Oregon: A property owner may be exempt up to $150,000. Married couples, however, may be exempt up to $300,000.
31. South Carolina: The state’s law protects up to $76,125 in equity in a home or real estate used as a residence, with spouses who file a joint bankruptcy being able to double the exemption.
32. Tennessee: Homeowners can exempt up to $35,000 of equity — and that amount goes up to $52,500 for joint owners.
33. Utah: Homeowners may exempt up to $53,700 to protect their home, provided it’s their primary personal residence.
34. Vermont: An exemption of up to $125,000 of the equity in a home, condo, or mobile home can be claimed; it can’t be doubled, however, in cases of joint bankruptcy filing.
35. Virginia: This state allows for protection of $5,000 of real estate or personal property. That amount doubles if the individual is age 65 or older.
36. West Virginia: Homeowners may exempt up to $35,000 of their home or other property. That figure increases to $70,000 if you’re married, you and your spouse both own the property, and you file for bankruptcy together.
37. Wisconsin: A single person can protect up to $75,000 of equity in a home; spouses can double that amount to $150,000.
38. Wyoming: Homeowners can protect up to $100,000 of equity from bankruptcy. This can double for married couples who jointly own the property and file for bankruptcy jointly.
If you don’t see a state listed above, that means it’s one of the two (New Jersey or Pennsylvania) that doesn’t offer any homestead exemptions for use in a bankruptcy filing.
The Takeaway
Homestead exemption rules can help protect your home in instances of a bankruptcy filing and can be useful during a difficult financial time. The rules vary significantly by state but are worth investigating, as they may allow you to keep your home.
Refinancing a mortgage may also provide some relief if you’re a struggling homeowner. In addition to offering an array of mortgage loans, SoFi can also help you refinance at competitive rates and with a hassle-free process.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
What is a homestead exemption in bankruptcy?
A homestead exemption lets you protect a certain amount of equity in your primary residence from creditors when filing for bankruptcy. The amount and rules vary by state. For example, West Virginia allows up to $35,000 per person, while New Jersey doesn’t offer a homestead exemption.
Can married couples double the homestead exemption?
Some states allow married couples to increase the exemption. In Mississippi, a couple can each claim the $75,000 homestead exemption for a total of $150,000, while in Virginia, married couples filing jointly can combine the base and homestead exemptions to protect more of their equity. Other states, such as Vermont, don’t allow doubling for joint filers.
What states have the best homestead exemptions?
Florida, Texas, Kansas, and Iowa are the most generous states because they allow unlimited homestead exemptions. Depending on where you live, homestead exemptions can greatly affect bankruptcy outcomes.
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