How Much Equity Do You Need In Your Home To Refinance?

There is no simple number for an equity percentage that will allow you to refinance but 20% is usually a good beginning. If your home is worth a million dollars and you have a $800,000 mortgage, you are in the game with a good chance to refinance your mortgage.


A spike in home sales and prices combined with a boom in low- and no-down payment mortgages a few years ago explains why so many new homeowners don’t have enough equity to refinance today. Lack of equity, and especially being “upside down” or “underwater,” is a significant barrier because lenders are naturally loath to lend more than the value of the collateral.

Yet while many homeowners clearly can or can’t refinance, others are uncertain as to whether they have enough equity to do so. Unfortunately, the only way to truly find out whether you’ll qualify is to submit an application and pay a parcel of upfront fees that can amount to hundreds of dollars.

First estimate your home’s value

One good strategy is to discuss your situation with a loan officer or mortgage broker and try to figure out how much your home is worth before you submit a loan application.

“I recommend that people try to get every bit of information they can to get a good accurate estimate before they write that check [because] if [the lender is] collecting an application fee and you are paying for an appraisal and the deal falls apart, that’s a pretty expensive lesson,” Metzler says.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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