Is there a minimum equity requirement for mortgage refinancing?

No legal minimum equity requirement is generally mandated for mortgage refinancing across loans. However, loan providers usually impose their own minimum equity thresholds that borrowers must meet to qualify for refinancing.

Typical minimum equity requirements from financial institutions range from 10-20% loan-to-value (LTV) ratio. This means having at least 10-20% equity in the home compared to the outstanding mortgage loan amount.

The higher the equity, the lower the risk for financial institutions. So, borrowers with less than 20% equity usually have to pay higher interest rates or fees on a refinance. Low-equity loans also require private mortgage insurance. Use an online equity calculator to determine the value of the equity.