How Much Home Equity Do I Need? Thresholds for Every Major Decision
Different decisions require different amounts of equity. Here are the thresholds that matter, in one place.
To drop PMI: 20% equity (80% LTV)
Once your loan-to-value drops to 80% (and ideally 78% for automatic removal), you can request PMI removal on conventional loans. FHA loans require a refinance to drop MIP in most cases.
To refinance without PMI: 20% equity
Same threshold. Rate-and-term refinances above 80% LTV require either PMI or a higher rate to offset.
To open a HELOC: 15% equity (85% CLTV cap)
Most HELOC programs allow combined loan-to-value up to 85%. The more equity you have, the larger the credit line and the better the rate.
To do a cash-out refinance: 20% equity remaining (80% LTV cap)
Conventional cash-out maxes at 80% LTV — meaning you have to leave 20% equity behind. VA cash-out can go higher; FHA caps at 80%.
To sell without bringing money to closing: ~7–10% equity
Selling costs run 6–10% of sale price (agent commission, transfer taxes, closing fees). You need enough equity to cover those costs plus your loan payoff.
Frequently asked questions
How do I know how much equity I have right now?
Use our Home Equity Checkup. Enter your estimated home value and current loan balances and you'll see equity, LTV, and CLTV instantly.
Does the equity I built with extra payments count the same as appreciation equity?
Yes. Equity is equity — lenders don't care how you got there.