“How much equity do I actually need for a private mortgage in Ontario?”
Let’s clear up the confusion.
Because the answer isn’t what most people think.
First: What Is “Equity” — Really?
Equity =
Market Value of Your Home – Total Mortgages & Liens
If your home is worth $1,000,000
And your total mortgage balance is $650,000
You have $350,000 in equity (35%)
Private lenders focus heavily on this percentage — known as Loan-to-Value (LTV).
The Real Numbers in Ontario (2026)
In most cases:
✅ 65%–75% LTV = Very workable
(Meaning you have 25%–35% equity)
⚖️ 75%–80% LTV = Case-by-case
(20%–25% equity — depends on property & exit plan)
🚫 Above 80% LTV = Difficult
(Unless special circumstances apply)
Every deal is different — but generally speaking:
👉 25% equity or more opens doors.
👉 30%+ equity gives strong flexibility.
Why Private Lenders Care About Equity First
Unlike banks regulated under oversight from the Office of the Superintendent of Financial Institutions (OSFI), private lenders are not bound by federal stress test formulas.
That means decisions are typically based on:
✔ Property value
✔ Equity cushion
✔ Marketability of the asset
✔ Clear exit strategy
Income matters — but equity leads the conversation.
Why Banks Say No Even With Equity
In 2026, many Ontario homeowners are being declined due to:
• Stress test failure
• Income calculation issues
• Self-employed income averaging
• Internal risk flags
• Condo exposure limits
Institutions influenced by guidelines connected to the Canada Mortgage and Housing Corporation (CMHC) must follow conservative capital frameworks.
Private lending operates differently.
Example Scenarios
Scenario 1: Strong Equity
Home Value: $900,000
Mortgage Owing: $600,000
LTV: 67%
This is typically a strong private lending position.
Scenario 2: Moderate Equity
Home Value: $800,000
Mortgage Owing: $620,000
LTV: 77.5%
Possible — but structure matters.
Scenario 3: Thin Equity
Home Value: $700,000
Mortgage Owing: $590,000
LTV: 84%
Challenging. Limited room for fees and risk.
Property Type Matters Too
Private lenders look at:
• Detached homes (strongest)
• Semi-detached & townhomes
• Condos (building quality & market demand matter)
• Rural properties (location sensitivity)
The easier the property is to sell in a reasonable time frame, the more comfortable lenders are at higher LTVs.
The Hidden Factor: Exit Strategy
Equity alone isn’t enough.
Lenders also want to know:
• Are you refinancing back to a bank?
• Selling within 6–12 months?
• Improving income position?
• Resolving temporary credit issues?
A clear repayment plan strengthens approvals — even at tighter equity levels.
So… What’s the Sweet Spot?
In Ontario’s current environment:
🔹 30% equity is ideal.
🔹 25% equity is workable.
🔹 Below 20% becomes very restrictive.
If you’re unsure, it’s worth having your property reviewed.
You may have more equity than you think.
When Private Mortgages Make Sense
• Renewal declined
• HELOC reduced
• Failed stress test
• Self-employed income
• Notice of Sale risk
• Short-term bridge financing
Equity-based lending isn’t permanent financing.
It’s strategic financing.
Used correctly, it buys time and control.
Equity-Based Lending in Ontario
At Lendworth Financial, we work with homeowners across Toronto, Vaughan, Mississauga, Markham, Richmond Hill and throughout Ontario.
As a direct private mortgage lender, we focus primarily on:
✔ Property value
✔ Equity position
✔ Structured repayment plans
In many cases, approvals are issued quickly once due diligence is complete.
Wondering If You Qualify?
If you believe you have 25%+ equity, you may have options — even if your bank said no.
📞 Call 905-597-1225
Serving all of Ontario