First, what counts as your equity
Your equity is your home's current value minus everything you still owe against it. If a home is worth $400,000 and you owe $250,000, you have $150,000 of equity. But equity and borrowable equity are two different numbers — lenders deliberately leave a cushion of equity untouched, so you can't borrow the full $150,000 in that example.
The home's value isn't self-reported, either. A lender establishes it with an appraisal or valuation, and that figure — not what you paid or what a website estimates — is what the math runs on.
The cap: combined loan-to-value (CLTV)
The limit is set by combined loan-to-value — the total of everything owed on the home (your first mortgage plus the new equity loan or line) divided by the home's value. Lenders commonly cap CLTV somewhere in the 80–90% range, though the exact ceiling varies by lender, product (line vs. lump sum), credit profile, and whether the home is your primary residence. The cap is why some of your equity always stays untapped.
The formula follows directly:
- Max total debt allowed = home value × max CLTV
- Roughly available to borrow = max total debt allowed − what you currently owe
Worked examples
Take a $400,000 home with $250,000 still owed, at an example 85% CLTV cap. Max total debt allowed is $400,000 × 0.85 = $340,000. Subtract the $250,000 you owe, and roughly $90,000 is available to borrow against your equity. The table above runs the same math across a few scenarios.
Notice the last row: a $350,000 home with $300,000 owed is already above an 85% cap, so there's nothing available even though there's $50,000 of raw equity. The cap, not your raw equity, is usually the binding constraint — which is why two homeowners with the same equity can have very different borrowing limits.
What else moves the number
CLTV sets the ceiling, but your actual approved amount also reflects your income and existing debts (whether you can carry the new payment), your credit, and the specific product. A revolving line and a fixed lump sum can be underwritten to different limits — the difference between them is covered in HELOC vs. home equity loan.
All of the figures here are illustrative math to show how the formula works — not a quote, an offer, or a commitment to lend. Before you lean on a number, it's worth thinking through when tapping equity actually makes sense.
Get your real number
The only way to know your actual limit is to run your real value, balance, and credit through underwriting. A soft-credit pre-qualification (no impact to your score) lets a licensed loan officer apply the right CLTV cap for your situation and tell you what's realistically available — no rate quote until your file is reviewed.
