The Core Formula: 80% Loan-to-Value (LTV) Minus Your Balance
Under Canadian federal lending rules (OSFI Guideline B-20), the maximum amount you can borrow through a mortgage refinance is 80% of your home's current appraised value, minus what you still owe on your existing mortgage.
Unlike a home purchase (where default insurance allows down payments as low as 5%), refinances in Canada cannot be default-insured. That means at least 20% of the property's value must stay untouched as homeowner equity.
Worked Examples: Accessible Equity Across 3 Typical Homes
Illustrative arithmetic showing the 80% refinance ceiling vs. the 65% standalone HELOC ceiling.
| Appraised Home Value | 80% Max Mortgage | Current Balance | Accessible Refinance Equity |
|---|---|---|---|
| $500,000 | $400,000 | $280,000 | Up to $120,000 |
| $650,000 | $520,000 | $350,000 | Up to $170,000 |
| $850,000 | $680,000 | $440,000 | Up to $240,000 |
Want to plug in your own home value and balances? Try our interactive Mortgage Refinance & Equity Calculator.
80% Refinance Limit vs. 65% HELOC Limit
Homeowners often ask why some calculators show a 65% limit while others show 80%. Both numbers are federal rules, and they apply to different structures:
- Up to 80% on an Amortizing Refinance: When your borrowing is structured inside a regular mortgage with scheduled principal-and-interest payments, total borrowing can reach 80% of the appraised value.
- Up to 65% on a Revolving HELOC: The revolving portion of a Home Equity Line of Credit (HELOC) cannot exceed 65% of the home's value. If you combine a HELOC with an amortizing mortgage at the same lender, the two together can reach 80%, provided the slice between 65% and 80% is paid down on an amortizing schedule.
What Determines How Much of That Equity You Qualify For?
Your equity sets the ceiling, while your income, debts, and credit determine how much of that ceiling a lender will approve:
- The Federal Mortgage Stress Test: Lenders qualify your new refinance payment at the greater of 5.25% or your contract mortgage rate plus 2%.
- Paying Out Debts Improves Your Ratios: When a refinance is used for debt consolidation, paying off car loans, credit cards, and lines of credit at closing removes those high monthly payments from your Total Debt Service (TDS) ratio, making it significantly easier to qualify.