How much equity do I have? The number lenders use isn't the one you think
Your home equity isn't your online estimate minus your mortgage. Lenders start from an appraised value, subtract every debt secured on the home, and then look at the percentage, not the dollars. Here's how to work out the number they'll actually use, with a worked example.
Home equity is your home's value minus everything secured against it, including your mortgage, any HELOC and other secured loans. Lenders don't use your online estimate or property tax assessment; they use an appraisal or another valuation method, and they look at your equity as a percentage of value (or its mirror, the loan-to-value ratio). In our example, a home appraised at $650,000 with a $380,000 mortgage and a $25,000 HELOC has $245,000 of equity, 37.7%, an LTV of 62.3%. If the appraisal came in at $620,000 instead, the room to borrow up to 80% would drop from $115,000 to $91,000.
Key takeaways
- →Equity = home value minus every debt secured on it, including your mortgage, HELOC and other secured loans, per FCAC.
- →Lenders use the appraised value, not your online estimate or tax assessment. OSFI expects lenders to value homes carefully and more conservatively in fast-rising markets.
- →The percentage matters more than the dollars. Equity % and loan-to-value (LTV) are two sides of the same number.
- →Your equity isn't all usable. Most borrowing options stop at 80% of value, or 65% for a HELOC.
- →Equity grows two ways: paying down your mortgage and rising home prices.
Short answer: To work out how much equity you have, take your home's current value and subtract everything secured against it: your mortgage, any home equity line of credit and other secured loans [1]. Then divide by the value to get a percentage. The catch is the starting number. A lender won't use your online estimate or your property tax assessment; it uses an appraisal or another valuation method [3], and it subtracts every registered debt, not just your mortgage.
This guide shows how to calculate equity the way a lender does, why the result often differs from what you expect, and how much of it you can actually use. If you're planning to borrow against it, our equity takeout page explains the options.
Step 1: Start from the value a lender will use
FCAC says the lender may determine your home's value with an appraisal, or use the purchase price [2]. OSFI's guideline for federally regulated lenders allows on-site inspections, third-party appraisals or automated valuation tools, and expects lenders to be more conservative in fast-rising markets [3].
| Value source | What it is | Does a lender use it? |
|---|---|---|
| Online estimate | An automated guess from listing and sale data | Not on its own; useful as a rough guide (our experience) |
| Property tax assessment | Your municipality's value for tax purposes | No. In Ontario, current assessments are based on a January 1, 2016 valuation date [4] |
| Recent sales nearby | What similar homes actually sold for | Indirectly; appraisers rely on them |
| Appraisal or lender valuation | A professional estimate for lending | Yes [2] [3] |
In our experience, online estimates often run higher than appraisals for homes with dated kitchens and bathrooms, and lower for recently renovated ones. Assume your number could move either way.
Step 2: Subtract every secured debt
FCAC defines equity as the appraised value minus the balance of your mortgage, any HELOC and any other loans secured by the home [1]. People often forget:
- The HELOC balance, even if it's small or sits alongside your mortgage.
- A second mortgage or private loan registered on title.
- Other secured loans, such as some renovation or equipment financing registered against the property.
Step 3: Turn it into a percentage (equity % and LTV)
Lenders think in percentages. Your equity percentage is equity ÷ value. Your loan-to-value (LTV) is total secured debt ÷ value. They always add up to 100%.
Illustration: a home appraised at $650,000, a $380,000 mortgage and a $25,000 HELOC balance.
- Equity: $650,000 − $380,000 − $25,000 = $245,000
- Equity percentage: $245,000 ÷ $650,000 = 37.7%
- LTV: $405,000 ÷ $650,000 = 62.3%
Want a lender-ready equity number? A licensed 8Twelve agent can estimate your value, total your secured debts and show what you could access across 65+ lenders, OAC. See equity takeout options
Why the number lenders use isn't the one you think
Here's how the same home looks with three different starting values. "Room to 80%" is the most you could have in total secured debt at 80% LTV, minus what you owe now.
| Starting value | Equity | Equity % | Room to 80% LTV |
|---|---|---|---|
| Online estimate: $690,000 | $285,000 | 41.3% | $147,000 |
| Appraisal: $650,000 | $245,000 | 37.7% | $115,000 |
| Lower appraisal: $620,000 | $215,000 | 34.7% | $91,000 |
Calculated in Python. Illustration only; not an appraisal or an offer.
A $30,000 difference in value changed the borrowing room by $24,000, because only 80% of the value counts. In our experience, this is a common surprise for homeowners who plan around an online estimate.
How much of your equity can you actually use?
Having equity and being able to borrow it are different things. FCAC and OSFI set out the usual limits [1] [2] [3]:
| Option | Usual maximum (share of home value) | Minimum equity you need |
|---|---|---|
| Refinance or home equity loan | Up to 80% | 20% |
| HELOC combined with a mortgage | Up to 80% in total; the revolving part up to 65% | 20% |
| Standalone HELOC | Up to 65% | More than 35% |
| Reverse mortgage (55+) | Up to 55% | Depends on age and home |
In our example, 37.7% equity clears the more-than-35% bar for a standalone HELOC [2], and about $115,000 is available up to 80%, OAC. You still need to qualify on income and credit, and federally regulated lenders apply the stress test [2]. Our home equity takeout guide compares the ways to borrow it.
How your equity grows
FCAC notes equity grows as you pay down your mortgage and as your home's value rises [1].
- Paydown: on a $380,000 mortgage with 20 years left at an assumed 4.49%, about $12,100 of the first year's payments goes to principal (Python, semi-annual compounding).
- Price changes: a 5% rise on $650,000 adds $32,500 of equity; a 5% fall removes it.
- Extra payments: prepayments go straight to principal, if your mortgage allows them.
Quick checklist before you borrow
- Get your latest mortgage and HELOC statements for exact balances.
- Check title for any other registered loans.
- Use a conservative value, not the highest online estimate.
- Work out your LTV and the room to 80% (or 65% for a HELOC on its own).
- Compare a HELOC vs a refinance or a home equity loan before you choose.
From our desk: when we run equity numbers for clients, we start from a value we'd expect an appraiser to support, not the most optimistic estimate. It avoids planning a renovation or debt payoff around money that isn't there.
How much equity you have depends on the value a lender will accept and on every debt secured against your home. Work it out conservatively, think in percentages, and remember that only part of it is usable.
Run the numbers: see your payments with our mortgage payment calculator, or check the mortgage refinance requirements before you apply.
This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.
Examples are for illustration only, as of October 30, 2026, and are not an appraisal, an offer or a statement of your home's value. Borrowing limits checked against FCAC and OSFI on October 30, 2026; lenders set their own criteria, OAC. 8Twelve does not lend or fund mortgages or HELOCs; we arrange them with third-party lenders.
Frequently asked questions
Sources
- Borrowing against home equity - FCAC
- Home equity line of credit - FCAC
- Guideline B-20: Residential Mortgage Underwriting Practices and Procedures - OSFI
- Property tax (assessment valuation date) - Government of Ontario
Last reviewed on November 2, 2026