“How much equity do I need?” has two parts. First, how much does a lender require before it will lend at all? Second, how much should you keep for yourself after borrowing? The answers depend on the lender, the property and your plans.

What lenders require

Every lender sets a maximum loan-to-value (LTV): the most that all borrowing against the home can reach as a share of its value. Whatever is left above that line is equity the lender wants to stay untouched, as its safety margin.

  • Federally regulated banks limit a refinance to 80% of the home’s value, so at least 20% equity must remain.
  • Alternative lenders and credit unions set their own limits, often similar for typical homes, and sometimes lower for rural or unusual properties.
  • Private lenders set limits case by case.

To see how this works with your numbers, follow the steps in how to calculate your home equity.

What changes the requirement

  • Property type and location. Lenders want more equity left on acreages, rural homes and properties that are harder to sell.
  • Your credit and income. A weaker file may mean the lender wants a bigger cushion.
  • First or second position. A second mortgage looks at combined borrowing, which can limit what’s available.
  • Condition. Homes needing major repairs may be valued conservatively.

How much you should keep

Even if a lender would let you borrow up to its limit, that doesn’t mean you should. Leftover equity:

A simple rule of thumb

Borrow the amount you actually need for a clear purpose, not the maximum available. If the plan only works by borrowing every possible dollar, it’s worth pausing to read the risks of borrowing against your home.

Get your numbers

A licensed mortgage broker can tell you how much equity each type of lender would want left in your home, and what that means for how much you can borrow.

This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.