Refinancing
How Much Equity Do I Need to Refinance?
Equity requirements for rate and term, cash out, investment property and streamline refinances, plus how mortgage insurance changes the math.
Updated 2026-08-21| Applies to: Homeowners unsure whether they have enough equity to refinance.
The short answer
Equity requirements depend on the program and the purpose. Rate and term refinances often allow higher loan to value ratios than cash out, government streamline programs may require very little equity, and cash out on an investment property typically requires the most. Having at least twenty percent equity generally gives you the widest set of options and avoids mortgage insurance on conventional financing.
How equity is measured
Lenders use loan to value, which is the loan amount divided by the appraised value, not the price you paid or an online estimate. If a second lien stays in place, combined loan to value is used instead.
General patterns
- Rate and term conventional: higher loan to value is often possible, with mortgage insurance above eighty percent.
- Cash out on a primary residence: more retained equity is generally required than rate and term.
- Cash out on an investment property: the most conservative of the common scenarios.
- FHA and VA streamline style refinances: designed for reduced documentation and may not require an appraisal.
If you are short on equity
- Bring funds to closing to reduce the balance.
- Wait for amortization and market movement to change the ratio.
- Consider a second lien or HELOC instead of a first mortgage refinance.
- Ask whether a value dispute or reconsideration of value is appropriate if the appraisal looks wrong.
Do not guess at your value from a website. I can pull comparable data and tell you whether an appraisal is likely to support the loan you want.
Educational purposes only. Refinance and VA loan guidelines vary by program, borrower circumstances, property type, entitlement status, documentation and lender requirements. All financing is subject to application, verification, applicable program guidelines and underwriting approval. Not a commitment to lend. Manny Oloyede | Mortgage Broker | NMLS 1824463 | Ultimate Mortgage Brokers LLC. Equal Housing Opportunity.
Frequently Asked Questions
People also ask
How soon after buying can I refinance?
This depends on the loan program and lender, and some loans have waiting periods before a refinance is allowed; ask your loan officer about the specific rules for your loan.
Read: When Does Refinancing Make Sense?Who pays for the appraisal?
The buyer typically pays, often up front. The report is ordered by the lender through an independent process.
Read: What Happens if the Appraisal Comes in LowDoes PMI come off automatically?
Conventional PMI generally terminates automatically at 78% of the original value on the original schedule, if payments are current.
Read: How and When to Remove PMIHow long does a refinance take?
Commonly a few weeks, driven mainly by appraisal scheduling, title work and how quickly documents come back.
Read: Refinancing Explained: How a Refinance Actually WorksIs a cash out refinance more expensive?
Generally yes. Pricing adjustments for cash out are typically higher than for rate and term at the same credit score and loan to value.
Read: Rate and Term vs Cash Out RefinanceCan I roll closing costs into the loan?
Usually yes, if you have enough equity for the resulting loan to value.
Read: How Much Does It Cost to Refinance?Terms used in this guide
- Loan to Value
- The loan amount divided by the property value. A $200,000 loan on a $250,000 home is an 80% LTV.
- Equity
- The difference between what your home is worth and what you still owe on loans secured by it.
- Appraisal
- An independent opinion of a property's market value, ordered by the lender and based largely on comparable sales.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
Keep reading
Rate and Term vs Cash Out Refinance
How rate and term refinances differ from cash out refinances in pricing, equity requirements, underwriting and what you can do with the proceeds.
HomeownershipHow and When to Remove PMI
The difference between requesting PMI cancellation, automatic termination and refinancing out of mortgage insurance, plus what FHA borrowers should know.
Problems & FixesWhat Happens if the Appraisal Comes in Low
Why appraisals come in below the contract price, the five options buyers and sellers have, and how a reconsideration of value works.
RefinancingRefinancing Explained: How a Refinance Actually Works
What a refinance is, the types available, how the process compares to a purchase, and how to tell whether refinancing is worth it for your situation.
Questions about your own numbers?
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