To determine how much you can borrow with a home equity loan, divide the outstanding balance on your mortgage by the current value of the home. Based on your financial history, lenders generally want to see an LTV of 80% or less, meaning your home equity is 20% or more. In most cases, you can borrow up to 80% of the total value of your home. Therefore, you may need more than 20% home equity to take advantage of a home equity loan.
First, remember that most lenders require you to maintain at least 20 percent of your home equity, just as a buffer in case home prices drop. If you don't have more than 20 percent equity, you're unlikely to qualify.