Home equity calculation
How Much Equity Can I Take Out of My Home?
A common starting point is 80% of your home’s acceptable value, minus the mortgage and any other debts secured against the property. That calculation shows theoretical borrowing room—not a guaranteed approval or necessarily the amount you should borrow.
Estimated accessible equity = home value × 80% − mortgage balance − other secured debts. Then account for the amount needed to cover refinancing costs and the lender’s approved mortgage amount.
Gross equity versus accessible equity
Gross home equity is the property value minus the mortgage and other debts registered against the home. Accessible equity is the portion a lender may permit you to borrow after applying its maximum loan-to-value, property valuation and underwriting requirements.
Consider a home worth $650,000 with a $350,000 mortgage:
| Calculation | Amount |
|---|---|
| Property value | $650,000 |
| Less existing mortgage | − $350,000 |
| Gross equity | $300,000 |
| 80% of property value | $520,000 |
| Less existing mortgage | − $350,000 |
| Theoretical accessible equity | $170,000 |
The homeowner has $300,000 of gross equity, but the general 80% limit leaves approximately $170,000 of theoretical borrowing room. The remaining $130,000 represents the 20% equity cushion that would remain in the property at an 80% loan-to-value.
Why is 80% commonly used?
The Financial Consumer Agency of Canada states that homeowners may usually borrow up to 80% of a home’s value through home-equity borrowing. The home acts as security for the loan. The exact maximum depends on the product and lender, and some applications are approved below 80%.
An 80% ceiling does not mean every homeowner can borrow to that level. The lender must accept the property value and approve the borrower’s income, credit, debts, property and requested mortgage terms.
Home-equity examples at different property values
The following examples assume no other loans are registered against the property and use the general 80% calculation.
| Home value | 80% maximum secured borrowing | Mortgage balance | Theoretical room |
|---|---|---|---|
| $400,000 | $320,000 | $250,000 | $70,000 |
| $500,000 | $400,000 | $300,000 | $100,000 |
| $650,000 | $520,000 | $350,000 | $170,000 |
| $800,000 | $640,000 | $450,000 | $190,000 |
| $1,000,000 | $800,000 | $600,000 | $200,000 |
These are mathematical examples only. They do not account for qualification, transaction costs, a lower lender valuation, existing HELOC balances, secondary financing or product-specific limits.
Calculate your starting point
Enter your home value, mortgage balance and current payments for an initial refinance estimate.
Does a HELOC have the same limit?
Not exactly. FCAC states that the revolving HELOC portion may generally be up to 65% of the home’s value. When a HELOC is combined with a mortgage, total borrowing secured against the property may generally reach 80% of the value, subject to lender rules.
Using the $650,000 property example, 65% is $422,500. That does not mean a homeowner with a $350,000 mortgage automatically receives a $422,500 HELOC. The mortgage and HELOC structure, charge registration, lender limits and qualification determine what is available.
A HELOC provides reusable borrowing room, usually at a variable rate. A refinance advances the approved amount through a new or increased mortgage with a scheduled principal-and-interest payment. The guide to accessing home equity in Ontario compares these structures with second mortgages and readvanceable products.
What can reduce the amount you can take out?
A lower lender valuation
The calculation uses the value accepted by the lender—not necessarily an online estimate, municipal assessment or expected sale price. If a $650,000 estimate is appraised at $600,000, the 80% ceiling falls from $520,000 to $480,000. With the same $350,000 mortgage, theoretical room falls from $170,000 to $130,000.
Other secured debts
An existing HELOC, second mortgage or other registered obligation must be included. If the $650,000 property has a $350,000 first mortgage and a $40,000 HELOC balance, theoretical room at 80% becomes $130,000—not $170,000.
Refinancing costs
A mortgage penalty, legal work, appraisal, discharge, registration and administration fees may reduce net cash received. If the new borrowing includes these costs, they consume part of the available room and increase the new mortgage balance.
Income and debt-service qualification
A lender may approve less than the property-based maximum when the requested mortgage is not supported by verified income and existing obligations. Equity does not replace the need to qualify under the lender’s policies.
Credit and lender policy
Credit history, recent missed payments, property type, location and the purpose of funds can influence the available lenders, pricing, documentation and maximum loan-to-value.
How to estimate the net cash you may receive
The accessible-equity formula calculates the maximum increase in secured borrowing. Net funds are lower when costs or required payouts come from the refinance proceeds.
Illustrative net-cash calculation
| Item | Amount |
|---|---|
| New mortgage requested | $500,000 |
| Existing mortgage payout | − $350,000 |
| Estimated penalty and closing costs | − $7,000 |
| Required secured-debt payout | − $20,000 |
| Illustrative net funds | $123,000 |
Figures are rounded and illustrative. Obtain current payout statements and transaction-cost estimates before relying on a net-funds calculation.
How lenders decide what to approve
The lender typically reviews:
- verified employment, self-employment, pension, rental or other acceptable income;
- the existing mortgage and all monthly debt obligations;
- credit history and recent borrowing activity;
- the accepted property value, type, condition and location;
- the requested loan amount and intended use of funds;
- the proposed rate, term and amortization; and
- the documentation required for the selected lender and product.
Federally regulated lenders apply a minimum qualifying rate to many uninsured mortgage applications. OSFI currently describes it as the greater of the contract rate plus 2% or a 5.25% floor. Other lender types may use different policies. See how to qualify for mortgage refinancing in Ontario for the complete review.
How much should you take out?
The maximum available amount and the appropriate amount are different. Start with the purpose and the smallest amount that accomplishes it. Then test the payment, total interest, remaining equity and the budget if rates or expenses rise.
For a renovation, include a reasonable contingency but avoid borrowing far beyond a documented project budget. For debt consolidation, include current payout amounts and transaction costs, then create a plan that prevents balances from returning. For investment or business purposes, obtain appropriate legal, tax and financial advice.
Borrowing against equity may offer a lower rate than unsecured credit, but failure to repay can have serious consequences. Approval for a larger amount does not make using the full amount necessary or appropriate.
Costs that belong in the calculation
- mortgage prepayment penalty when breaking a closed term;
- appraisal or valuation cost;
- legal, title-search and title-insurance costs;
- mortgage discharge and registration charges;
- administration, lender or brokerage fees when applicable; and
- interest on any costs added to the mortgage.
Review the complete guide to mortgage refinance costs in Ontario. When the existing mortgage is mid-term, also compare whether refinancing is worth the penalty.
Information to collect for an accurate estimate
- a recent mortgage statement showing the balance and maturity date;
- a current payout or penalty estimate from the lender;
- statements for any HELOC or second mortgage;
- a reasonable estimate of the property’s current market value;
- income documents appropriate to your employment or income type;
- current balances and payments for all debts; and
- the exact amount and purpose of the requested funds.
Frequently asked questions
Can I take out all the equity in my home?
Generally, no. Home-equity borrowing usually leaves at least 20% equity in the property when total secured borrowing is limited to 80% of the acceptable value. Product and lender limits may require more equity.
How much can I refinance my house for?
A common property-based ceiling is 80% of the home’s acceptable value. Subtract the existing mortgage and other secured debts. The final amount is also limited by qualification and lender policy.
What if my appraisal comes in lower than expected?
The lender normally uses its accepted valuation. A lower value reduces the maximum secured borrowing and may require a smaller advance, a different structure or additional funds from the homeowner.
Can I access equity with a paid-off home?
Potentially. A mortgage or HELOC could be registered against the property, subject to income, credit, property and lender qualification. Having no mortgage does not by itself guarantee approval.
Can refinancing costs be added to the mortgage?
Often they can be included when there is sufficient equity and the lender approves the total amount. This reduces net funds and means those costs may accrue interest.
Does using the online calculator affect my credit?
No. Warren’s refinance calculator provides an initial estimate without a credit inquiry. A lender credit check is normally part of an application.
Sources and current-information references
- Financial Consumer Agency of Canada: Borrowing against home equity
- Financial Consumer Agency of Canada: Home equity lines of credit
- Financial Consumer Agency of Canada: Breaking your mortgage contract
- Office of the Superintendent of Financial Institutions: Minimum qualifying rate
General information only: This page is educational and does not constitute financial, legal, tax or investment advice, a mortgage approval, or a commitment to lend. Mortgage and home-equity options, rates, qualification, limits and costs depend on the borrower, property, lender and timing. Information was reviewed on September 6, 2026; verify current requirements before making a decision.
Take the next step
Estimate your available equity and payment
Use the calculator for a starting estimate. Warren can then review the property value, mortgage payout, qualification, costs and appropriate borrowing amount.
