How far can your account fall before a margin call?
A margin call comes when your equity, the securities' value minus the loan, drops below the maintenance requirement. With $100,000 of stock and a $40,000 loan at a 30% requirement, that happens when the stock is worth $57,143, a fall of about 43%.
Margin call calculator
Long stock positions, cash margin account
The arithmetic
With V the market value of your securities, L the loan and m the maintenance requirement as a decimal:
- Equity share today is (V − L) ÷ V.
- The call triggers when the value falls to L ÷ (1 − m). For the example, 40,000 ÷ 0.70 = 57,143.
- Once below, the cash call is m × V − (V − L): enough to bring equity back to the requirement.
- Selling instead takes more, because each dollar sold also shrinks the account: you need to sell V − (V − L) ÷ m and use it to repay the loan.
Why the real line is usually higher
FINRA Rule 4210 sets the floor: equity of at least 25% of the market value of stocks you hold long. Brokers can, and do, set their own "house" requirement above that. Vanguard publishes 35% for most marginable securities; Ally publishes 30% for long stock, more for concentrated accounts. Single stocks that are volatile or make up much of the account often carry 50% or more, and a broker can raise a requirement without notice.
A broker also does not have to call you first. The SEC's investor bulletin on margin is plain about it: the firm can sell your securities without contacting you, and it chooses which ones. Run this calculator at the requirement your broker actually applies to your holdings, which is on your account's margin details page.
Sources: FINRA Rule 4210; SEC, Understanding Margin Accounts; broker house requirements as published on Vanguard and Ally Invest pages.