Can you borrow more than half the purchase price on margin?

Not on the opening purchase of stock in a standard margin account. Regulation T caps the first loan at half the price. Once you own the shares, the loan can grow relative to the position as prices fall or interest accrues, until FINRA's floor or the broker's house figure forces a call.

Does a margin loan have a fixed repayment date?

No. A margin loan usually stays open with no schedule, and interest is added to the balance each month. The limit that matters is the equity requirement: as long as your equity stays above the broker's maintenance figure, the loan can stay outstanding, and the broker can still change that figure.

How Much Can You Borrow on Margin, and Who Sets the Limit?

Q: How Much Can You Borrow on Margin, and Who Sets the Limit?

For a new purchase of marginable stock, Regulation T from the Federal Reserve Board caps the loan at 50% of the price, so $25,000 of cash buys up to $50,000 of shares. After that, FINRA's maintenance rule and your broker's house requirements decide how much can stay borrowed, and a broker can lend less, or nothing, on particular stocks.

Most margin agreements carry a sentence saying the firm may change its requirements at any time, without advance notice, and may decline to extend credit on any security it chooses. Read it twice. That clause does more to set your borrowing limit on a given Tuesday than any percentage printed in the account opening packet, because it sits on top of the public rules and can only make them stricter.

The public rules come first, though. Each comes from a different body. Each governs a different moment in the life of the loan.

Where does the 50% come from?

The Federal Reserve Board’s Regulation T covers the moment you buy. It lets a broker lend you up to half the purchase price of marginable stock, and you put up the other half, either in cash or in the loan value of securities you already hold in the account, before the trade settles.

That $50,000 is a ceiling. Nothing obliges you to use it. The initial margin figure only tells you the most the broker is allowed to lend at the start, and many firms set their own opening requirement above 50% for some stocks.

What decides how much can stay borrowed?

Once the trade settles, Regulation T steps back and maintenance takes over. FINRA Rule 4210 says the equity in a long margin account has to stay at no less than 25% of the market value of the securities. Your broker can demand more. Most publish a house figure that is higher for at least some holdings.

The difference shows up as a price. Take the $50,000 position with its $25,000 loan. At FINRA’s 25% floor, the call arrives when the position is worth 25,000 / 0.75, about $33,333, a drop of roughly 33%. Under a hypothetical house rule of 35%, the call arrives at 25,000 / 0.65, about $38,462, which is a fall of about 23%.

With the loan and the share count unchanged, a house rule ten points higher moves your call up by more than $5,000 of position value, which is why the maintenance margin line in your broker’s rate and requirements table deserves as much attention as the interest rate beside it.

Which stocks will a broker refuse to lend on?

Plenty. Regulation T limits loan value to margin-eligible securities, which broadly means exchange-listed stocks, and shares traded over the counter mostly do not qualify. Brokers then go further. Low-priced shares, very volatile ones, thinly traded names and recent listings often carry a higher requirement or none of the loan value at all, and a firm can set a 100% requirement on a stock it considers risky, which means you pay in full.

Concentration is the other trigger. If one stock makes up most of the account, a broker can raise the requirement on that position because a single bad headline could wipe out the collateral behind the whole loan. The reasons a particular stock gets no loan value are covered in why a stock is not marginable.

Can gains raise your borrowing limit?

Yes, through the special memorandum account. When the position rises, the equity above the Regulation T requirement is credited to a line on your statement that works like unused borrowing capacity.

The SMA balance does not fall when the stock later drops, which surprises people. It stays as a credit you could use to borrow more, even while your actual cushion above maintenance is shrinking, so a large SMA figure on a falling account tells you what the broker would lend, which can be far more than you can afford to owe. The special memorandum account entry walks through how it moves.

What about day-trading buying power?

Some brokers show a larger intraday figure. It applies to accounts classified as pattern day traders. Those rules come from FINRA, and FINRA has been revising them, so any dollar threshold or multiple you remember may be out of date. Check the current FINRA rule and your broker’s own terms before you count on intraday leverage, and assume the broker’s figure is the one that binds.

So what is your actual limit?

Your limit is a stack of rules. Regulation T sets the most you can borrow on the day you buy, FINRA sets the least equity you can hold afterwards, and your broker can tighten either of those for any stock or any account whenever it likes, which means the number that governs your loan is whichever layer is strictest on the day you look.