Mishnah Berurah — משנה ברורה

Not above three - For [higher than that] is not called "the corner of the garment", rather it's [just] "the garment". And the Torah wrote "...on the corners of their garments..." (Numbers 15:38). And see in Beit Yosef, where he wrote that three finger-widths exactly, it is permitted to distance it [that much] and to make the hole right after that point. And many of the halachic authorities argue on this and they hold that since [by doing it that way] you have three finger-widths, [therefore] anything past that is called "a garment" and not "a corner". Therefore, one should be careful to make/start the hole within three finger-widths. The Magen Avraham wrote that if one made the hole above three [finger-widths from the edge], even though when they tied the [first] knot it made the strings that were on the garment (ie. since the hole is past 3 finger-widths, it's called being on the garment and not on the corner) shorter and it bunched up the [fabric of the] corner and [so now] the hole is less than three [finger-widths from the edge], it is invalid, because in any case, the corner has a measurement [that's considered to be part] of "the garment" [and not "the corner"]. And similarly, if one made the hole above the length of an "agudal" (i.e from the knuckle of the thumb until the end of its fingernail), and because of the [first] knot it bunched up the garment to the point that [now] there is less than the length of an "agudal", it is valid since you have in any case the [proper] measurement from the corner.