Published:
Last updated:
How Much Equity Do You Need for a Home Equity Loan in Ontario? (The 80% LTV Math)
Rate and fee ranges below are CreditReboot’s working ranges as of October 23, 2026. Rates move — everything here is a range, not a quote.
“How much equity do I need?” is the first question on every home equity call and it has a one-line answer that almost nobody gives straight: enough that everything registered on the house, including the new loan, stays under 80% of what it is worth.
Here is that rule worked on typical homes, a table you can read your own numbers off, and the things that move the ceiling up or down.
In Ontario a home equity loan is sized by combined loan-to-value, not by how much equity you have in total. The working ceiling is 80% of appraised value: your existing mortgage plus the new loan has to fit under it. On a $700,000 home that ceiling is $560,000, so with a $400,000 mortgage there is about $160,000 of room, less closing costs. The ceiling is the same at B lenders and private lenders in major centres; it drops to 65–70% on rural or unusual property, and some private lenders stretch to 85% on strong urban homes. Credit score does not change the ceiling, only which lender and what rate.
The short version
- The rule: existing mortgage + new loan ≤ 80% of appraised value. Total equity is not the number; room under the ceiling is.
- On a $700,000 home with $400,000 owing, room is about $160,000 before closing costs.
- The 80% ceiling applies at B lenders and private lenders alike in major centres; 65–70% rural; some private lenders go to 85% on strong urban property.
- Everything registered counts: a second mortgage, a CRA lien, a tax arrears certificate all sit inside the 80%.
- The appraisal sets the value. A realistic value from a lender’s appraiser, not a listing price, is what the math runs on.
The math, worked twice
Illustrative — Brampton detached, appraised $900,000
80% ceiling: $720,000
First mortgage owing: $600,000
Room: $120,000 before closing costs; about $114,000 net after a lender fee, legal and appraisal
Result: a routine $100,000–$115,000 home equity loan at a B lender or a private lender, depending on income and history
Illustrative — Toronto semi, appraised $1,100,000
80% ceiling: $880,000
First mortgage owing: $700,000
Room: $180,000 before costs — the standard Toronto file
Result: routine up to about $170,000; above that the combined LTV crosses 78% and pricing moves to the top of the range
Room to borrow at 80%
| Appraised value | Mortgage owing | 80% ceiling | Room before costs |
|---|---|---|---|
| $500,000 | $300,000 | $400,000 | $100,000 |
| $500,000 | $375,000 | $400,000 | $25,000 — marginal |
| $650,000 | $380,000 | $520,000 | $140,000 |
| $650,000 | $450,000 | $520,000 | $70,000 |
| $800,000 | $450,000 | $640,000 | $190,000 |
| $800,000 | $600,000 | $640,000 | $40,000 — marginal |
| $1,000,000 | $600,000 | $800,000 | $200,000 |
| $1,000,000 | $750,000 | $800,000 | $50,000 — marginal |
Read your own row: appraised value, times 0.8, minus everything owing. If the room is under about $30,000 the file is marginal, because closing costs take $3,000–$6,000 of it and most lenders have a minimum loan size. If it is over $50,000 the loan is routine. The score, the income and the reason for the loan then decide the tier and the price, not whether the loan exists.
What counts against the ceiling
| Registered on title | Counts? | Note |
|---|---|---|
| First mortgage balance | Yes | Payout figure, not the original amount |
| Existing second mortgage or HELOC limit | Yes | A HELOC counts at its limit, not its balance, with most lenders |
| CRA lien | Yes | Must usually be paid from proceeds |
| Property tax arrears certificate | Yes | Paid from proceeds |
| Judgments and writs | Yes | Paid or discharged at closing |
| Collections on your credit report (not on title) | No | Not registered; may still be paid at closing by choice |
What moves the ceiling
Property type and location. In Toronto, Peel, Hamilton and the rest of the GTA the ceiling is 80% at both tiers. Outside the GTA and Hamilton the list of lenders shortens and the ceiling drops depending on rural roads, acreages and small towns. Condition matters: an unfinished renovation or a house needing major work lowers the appraisal and with it the ceiling. And occupancy: an owner-occupied home gets the full ceiling; a rental is often capped lower.
Why total equity is the wrong number
A homeowner with $300,000 of equity in a $1,000,000 home and $700,000 owing has 30% equity and almost no room: the ceiling is $800,000, leaving $100,000 before costs, and at the top of the range the pricing is the worst. A homeowner with $200,000 of equity in a $500,000 home and $300,000 owing has 40% equity and $100,000 of room at the comfortable end of the range. Same room, very different file. Lenders think in loan-to-value because it measures their cushion; so should you. The product is on the home equity loans page; Brampton homeowners can start on the Brampton home equity page, and the rest of the province with the Ontario mortgage broker team.
What to have ready
A recent mortgage statement with the balance, the property tax bill, and your own honest estimate of value. From those three we tell you the room under 80% the same day, and whether an appraisal is worth ordering.
Find out your room under 80% before anyone orders an appraisal
Send us the mortgage balance and the address. You get the ceiling, the room, and whether the file is routine or marginal — within the day, no appraisal fee until it is worth it. Call 1-866-329-8801 or start online.
Equity needed for a home equity loan in Ontario: FAQ
Is 20% equity enough?
It is the edge. At exactly 80% loan-to-value there is no room for a new loan. In practice you need the existing mortgage to be at 65–70% of value or less for a meaningful home equity loan.
Does a bad credit score lower the amount I can borrow?
Not the ceiling. An 80% combined loan-to-value is the working limit at every tier. The score changes which lender takes the file and the rate, not the maximum.
Can I borrow more than 80% anywhere?
Some private lenders go to 85% on strong, easily sold urban property at a higher rate. Nobody reputable goes materially beyond that.
Does the lender use my purchase price or the current value?
Current appraised value, from an appraiser the lender accepts. If the house has risen since purchase, the room has grown; if it has fallen, it has shrunk.
My HELOC is at $0. Does it still count?
With most lenders, yes, at its limit, because you could draw it tomorrow. Closing or reducing the HELOC before applying is sometimes the cheapest way to create room.
What if I am just under the ceiling?
A small loan is still possible, but closing costs and minimum loan sizes make files under about $30,000 of room marginal. A partial paydown of the first mortgage, or waiting for an appraisal uplift, are the usual fixes.
This article is general information, not mortgage advice. Examples are illustrative and not a commitment to lend; approval depends on the property, equity, income and lender policy. Rate and fee ranges were reviewed on October 23, 2026 and change frequently. Speak with a licensed mortgage broker about your own file.
