function calculateHELOC() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var cltvLimit = parseFloat(document.getElementById('cltvLimit').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var resultArea = document.getElementById('resultArea');
var helocResult = document.getElementById('helocResult');
var breakdown = document.getElementById('calculationBreakdown');
if (isNaN(homeValue) || isNaN(cltvLimit) || isNaN(mortgageBalance)) {
alert('Please enter valid numbers for all fields.');
return;
}
// Logic: (Home Value * (CLTV Limit / 100)) – Current Mortgage Balance
var maxLendingAmount = homeValue * (cltvLimit / 100);
var availableHELOC = maxLendingAmount – mortgageBalance;
resultArea.style.display = 'block';
if (availableHELOC < 0) {
helocResult.style.color = '#dc3545';
helocResult.innerText = '$0';
breakdown.innerHTML = 'Analysis: Based on the ' + cltvLimit + '% LTV limit, you do not currently have enough equity to open a HELOC. The maximum total debt allowed for your home value is $' + maxLendingAmount.toLocaleString() + ', but you already owe $' + mortgageBalance.toLocaleString() + '.';
} else {
helocResult.style.color = '#28a745';
helocResult.innerText = '$' + availableHELOC.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
breakdown.innerHTML = 'How we calculated this:' +
'1. Max Borrowing Capacity (' + cltvLimit + '% of value): $' + maxLendingAmount.toLocaleString() + " +
'2. Subtract Current Mortgage: -$' + mortgageBalance.toLocaleString() + " +
'3. Available Credit Line: $' + availableHELOC.toLocaleString();
}
}
How Much Home Equity Can You Borrow?
A Home Equity Line of Credit (HELOC) is a flexible revolving credit line that uses your home as collateral. Unlike a standard home equity loan, a HELOC allows you to withdraw funds as needed, up to a specific limit, and pay interest only on the amount you actually use.
Understanding CLTV (Combined Loan-to-Value)
Lenders use the Combined Loan-to-Value (CLTV) ratio to determine how much they are willing to lend. Most banks limit your total mortgage debt (your first mortgage plus the new HELOC) to 80% or 85% of your home's appraised value. Higher credit scores may sometimes unlock CLTV limits up to 90%.
Example Calculation
Suppose your home is worth $400,000 and your lender allows an 80% CLTV. You still owe $250,000 on your primary mortgage.
Total Lending Limit: $400,000 × 0.80 = $320,000
Subtract Mortgage: $320,000 – $250,000 = $70,000
Available HELOC: $70,000
Factors That Impact Your HELOC Approval
Credit Score: A score of 720 or higher typically secures the best interest rates and higher CLTV limits.
Debt-to-Income (DTI) Ratio: Lenders prefer a DTI below 43% to ensure you can handle the monthly payments.
Home Appraisal: The bank will require a formal appraisal to verify the "Current Home Value" used in the calculation.
Income Stability: Proof of consistent income is required to show repayment ability during the "repayment period" of the HELOC.