It depends on what you are doing. Purchases can start with as little as 3–5% down. Avoiding PMI usually means 20% equity. Cash-out refinances and investment properties typically require more. Here is how lenders think about loan-to-value.
Equity is simply home value minus what you owe — lenders express it as LTV.
Conventional purchases can start around 3% down for eligible first-time buyers or 5% for many others — with PMI.
Roughly 20% equity (80% LTV) is the classic threshold to avoid PMI or request removal.
Can often go above 80% LTV, though PMI may apply on the new loan.
Primary homes often max near 80% LTV; second homes and investments usually need more equity.
Expect higher down payments — commonly 15%+ — so you start with more equity day one.
Appraised value and payoff timing determine the equity lenders will recognize.
These are common planning numbers — your scenario may differ with credit and occupancy.
Equity grows through payments, appreciation, and improvements — then financing unlocks it.
Step 1
Estimate value and payoff to calculate current LTV.
Step 2
Purchase, rate-and-term, or cash-out each have different equity needs.
Step 3
If under 20%, understand monthly PMI and future removal timing.
Step 4
We order valuation when it is time to refinance or remove PMI.
Related guides to help you compare options and move toward pre-approval.
2MG Daily
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No. Many conventional purchases close with far less than 20% down. Twenty percent is mainly about avoiding PMI and some refinance strategies.
Yes for refinances and some PMI removal paths, but lenders need a supporting appraisal or automated valuation process.
A HELOC uses equity through a second lien and affects combined LTV. It can be an alternative to cash-out refinancing.
Subtract your mortgage balance from a realistic market value. We can help refine that before you apply.
Share your goal — buy, drop PMI, or cash out — and Ryan or Steve will translate it into a clear LTV target.