How much of your equity can you actually borrow?
Your equity is simple arithmetic: what the home is worth minus what you owe on it. What you can borrow against that equity is a different number, and the gap between the two surprises almost everyone.
The CLTV ceiling
Lenders cap all loans on a property at a percentage of its value, called combined loan-to-value, or CLTV. Common ceilings run from 80 to 90 percent depending on the lender and your profile. The formula for your real borrowing room:
(Home value × CLTV limit) − current mortgage balance = what you can borrow
On a $425,000 home with a $265,000 balance: at an 80 percent ceiling you can borrow up to $75,000; at 90 percent, up to $117,500. Same house, same equity, a $42,500 difference based purely on which lender's ceiling you get. Run your own numbers in our home equity calculator.
What moves your ceiling
Three things, mostly: credit (higher scores unlock higher CLTV tiers), property type (primary homes get the best terms; investment properties get haircuts), and the lender's own appetite, which changes with the market. The value side matters too: the lender's appraisal or valuation model decides what "home value" means, and it may not match your Zillow number.
Why you shouldn't max it anyway
Borrowing to the ceiling leaves you nothing for a soft market. If prices dip 10 percent and you're at 90 percent CLTV, you owe more than the house is worth. Leaving a cushion isn't lost money; it's the difference between an inconvenience and a crisis if life turns.