The answer is not all of it. And the number is not set by how much equity you have. It is set by two things most people do not think about until a lender raises them, and by which of three products you use to reach the money.
Equity is the current market value of your home minus everything you owe against it. If your house would sell for $400,000 today and you still owe $220,000 on the mortgage, you have $180,000 in equity.
Two cautions come with that number. The value is what an appraiser says it is, not what a listing site estimates or what a neighbor got last spring. On a home equity request the appraiser is a neutral third party the bank engages, not a figure you choose. And you will not be able to borrow the entire $180,000, for reasons that come next.
There is not one way to borrow against a home. There are three, and they behave differently.
A home equity loan hands you a lump sum and a fixed payment. You borrow once and pay it back over a set term. It fits a known, one-time cost: a single renovation, a roof, a specific bill you can size today.
A home equity line of credit, or HELOC, is revolving. You draw against it as you need to, pay it down, and draw again, more like a credit card secured by your home. It fits costs that arrive in stages or on an unknown schedule: a remodel that unfolds over a year, tuition across several semesters, a cushion you may or may not use.
A cash-out refinance replaces your existing mortgage with a new, larger one and hands you the difference in cash. Instead of adding a second loan on top of your first, you rewrite the first. It can make sense when you want a large sum and the new first-mortgage terms stand on their own, but it touches your entire mortgage, not just the new money.
The money page goes deeper on the first two if you want to compare a home equity loan and a line of credit side by side. The point here is that the product is a decision about how you will use the money, not a race to the lowest sticker rate.
Two limits sit between you and your equity, and the smaller of the two wins.
The first is combined loan-to-value, or CLTV. A lender adds up every mortgage debt against the home, including the new one, and caps the total at a share of the home's value. Where that cap lands varies by lender, product, and property, but it commonly sits somewhere in the 80 to 90 percent range. It is almost never 100 percent, which is why you cannot borrow all your equity.
Walk it through on the $400,000 home. Say the cap is an illustrative 85 percent. Eighty-five percent of $400,000 is $340,000 in total mortgage debt allowed against the house. You already owe $220,000. That leaves about $120,000 available to borrow, not the full $180,000 of equity. The last slice of equity stays untouched on purpose, as the lender's and your own cushion against a soft market.
Where that equity came from matters in our part of the state. In the growing communities of Carver and Isanti Counties, Waconia, Chaska, Cologne, and Cambridge among them, many homeowners hold equity that arrived through appreciation rather than through paying the loan down. If you bought a few years ago, the value side of that equation likely moved further than your balance did. That equity is real and it counts the same. It is just worth knowing which half of the gap is doing the work, because the value half is the half an appraiser has to confirm.
The second limit is debt-to-income, and it can cap you below what the equity alone would allow. Lenders add up your monthly debt payments, including the new one, and compare that total against your gross monthly income before taxes. Generally it needs to stay at or under 43 percent.
Where you land inside that depends on the rest of your picture, so it is worth asking rather than assuming. Plenty of homeowners talk themselves out of applying because they guess they are over the line, and a fair number of them are not.
CLTV answers "how much is in the house." DTI answers "how much can you carry." You get the smaller of the two.
If you want the real number for your own home instead of an illustration, that is a short conversation. Sit down with one of our lenders and bring your most recent mortgage statement. The math takes about fifteen minutes.
A rate-only comparison misses what it costs to set the loan up, and those costs are not the same across the three structures. Three are worth pricing before you choose, and one of them is specific to Minnesota.
Mortgage registry tax. Minnesota charges this when a mortgage is recorded, calculated on the debt being secured. A cash-out refinance records a new mortgage on your entire new balance, so the tax is figured on the whole loan, the part you already owed included. A home equity loan or line records a mortgage only on the new amount you are borrowing. On a large balance that difference is real money. One local note worth knowing: Hennepin and Ramsey Counties add an environmental response fund tax on top of the state rate. If your home is in Carver, Isanti, McLeod, or Sibley County, you pay the state rate without that county addition, which makes the gap between the two structures somewhat narrower than it is for a metro borrower. Confirm current figures with your closer or the Minnesota Department of Revenue, since the details can change.
The appraisal. A lender sizes your loan against the home's value, and someone has to establish that value. A cash-out refinance almost always requires a full appraisal. A home equity loan or line may use a full appraisal or, on smaller amounts, a lighter valuation, depending on the lender and the size of the request. Either way it is an out-of-pocket cost you carry, so it is worth asking which type your request will need.
Location affects how smoothly this part goes. In an established subdivision in Waconia, Chaska, or Cambridge, recent comparable sales are plentiful and the value is straightforward to support. On an acreage parcel, a hobby farm, or an older home outside of town, comparable sales are thinner and the appraisal takes more judgment. That is where a lender who already knows the local market tends to reach a more sensible answer than a rigid template applied from out of state.
Title work. A cash-out refinance replaces your first mortgage, so the lender orders a new title insurance policy on the full loan amount, which on a large balance is one of the bigger line items. A home equity loan or line usually sits behind your existing mortgage and calls for a title search or a smaller junior-lien policy instead of a full new one. Same house, very different title bill.
None of this rules out a cash-out refinance, which can still be the right move when the new first-mortgage terms are strong on their own. It is a reason to get the full setup cost under each option, not just the rate, before you decide.
Match the product to the shape of the spending, not to the headline rate.
If the cost is one known number you can size today, a home equity loan gives you a fixed payment and no temptation to keep drawing. If the cost arrives in stages or you want a standby cushion, a HELOC lets you borrow only what you use. If you want a large sum and your existing mortgage is one you would happily rewrite anyway, a cash-out refinance folds it all into one loan, with the registry-tax caveat above.
Two other situations point elsewhere entirely. If your real goal is to buy your next home before this one sells, a bridge loan can carry you across the gap, and that is a different tool than any of these. And if what you actually want is a lower rate on the mortgage you already have, the question is whether the timing works on a straight refinance, not how to pull cash out.
One more factor worth a conversation with your tax advisor: since the 2017 tax law, interest on home equity debt is generally deductible only when the money is used to buy, build, or substantially improve the home that secures the loan. Consolidating other debt with it does not usually qualify. That does not make consolidation a bad idea, but it changes the after-tax math, so confirm it with someone who knows your return.
Ask these while you are still deciding, not at closing.
There is a real advantage to asking these of a lender who underwrites in your market. A local lender who underwrites here is looking at your home, your income, and the local market with judgment a national call center does not apply, and can often reach a different answer on a home that does not fit a rigid template.
You cannot borrow all your equity, and the amount you can borrow is set by combined loan-to-value and your debt-to-income, whichever comes in lower. The right product depends on how you plan to spend, and in Minnesota the registry tax belongs in the comparison from the start.
None of that has to be guesswork. If you are weighing a renovation, a consolidation, or a large one-time cost against the equity in your home, sit down with one of our lenders or stop by one of our branches across Minnesota. Bring your mortgage statement. We will run your actual number with you and talk through which of the three options fits what you are trying to do.
Usually not all of it. Lenders cap total mortgage debt against the home at a combined loan-to-value, commonly somewhere in the 80 to 90 percent range, then subtract what you already owe. On a $400,000 home with a $220,000 balance and an illustrative 85 percent cap, that leaves about $120,000 available, not the full $180,000 of equity. Your debt-to-income can lower the number further.
A home equity loan is a lump sum with a fixed payment, borrowed once and repaid over a set term. A home equity line of credit, or HELOC, is revolving, so you draw and repay as needed, more like a secured credit card. A loan fits a known one-time cost; a line fits costs that arrive in stages or on an unknown schedule.
Neither is better in general. A cash-out refinance replaces your whole mortgage with a larger one and can make sense when the new first-mortgage terms are strong on their own. A HELOC leaves your existing mortgage in place and adds a line on top. Setup costs separate them: a cash-out refinance is taxed on the entire new balance under Minnesota's mortgage registry tax and usually carries a full appraisal and a new title policy on the whole loan, while a home equity loan or line is taxed only on the new amount and often needs lighter valuation and title work. Compare the full setup cost, not just the rate.
Requirements vary by lender and product, but what your income can carry usually matters most. Lenders compare your total monthly debt payments, including the new one, against your gross monthly income before taxes, and that figure generally needs to stay at or under 43 percent. Credit history, the equity in the home, and the rest of your financial picture all factor in as well. If you are not sure where you land, it is worth asking rather than assuming.
If a mortgage is recorded, generally yes. The tax is calculated on the debt being secured. A cash-out refinance records a new mortgage on your full balance, so the tax applies to the whole loan. A home equity loan or line records a mortgage only on the new amount borrowed. Confirm current figures with your closer or the Minnesota Department of Revenue.
The lending math is the same statewide, but three things shift with location. Home values differ, so the same combined loan-to-value percentage produces very different dollars in one community than another. Hennepin and Ramsey Counties add an environmental response fund tax on top of the state mortgage registry tax, which homeowners in Carver, Isanti, McLeod, and Sibley Counties do not pay. And appraisals are more straightforward in established subdivisions, where recent comparable sales are plentiful, than on acreage or older rural properties, where they are thinner.
Sometimes. Since the 2017 tax law, interest on home equity debt is generally deductible only when the funds are used to buy, build, or substantially improve the home that secures the loan. Using the money to consolidate other debt usually does not qualify. Confirm your situation with a tax advisor before counting on the deduction.