Estimate how much credit you can access from your home's equity.
Based on a 0% LTV ratio, your estimated maximum HELOC limit is:
$0.00
Total Equity: $0.00
Combined Loan-to-Value (CLTV): 0%
Understanding HELOC and Your Maximum Credit Limit
A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows homeowners to borrow against the equity in their property. Unlike a standard home equity loan, a HELOC functions much like a credit card: you have a maximum limit, and you only pay interest on the amount you actually draw.
How the HELOC Limit is Calculated
Lenders use a specific formula to determine your borrowing power. The most critical factor is the Loan-to-Value (LTV) ratio. Most lenders allow a maximum Combined Loan-to-Value (CLTV) of 80% to 85%, though some may go higher depending on your credit score.
The Formula: (Home Value × Max LTV Percentage) – Existing Mortgage Balance = HELOC Limit
Practical Example
Imagine your home is worth $400,000 and your current mortgage balance is $250,000. If your lender offers a HELOC at an 85% LTV ratio:
85% of $400,000 = $340,000
$340,000 – $250,000 (Current Balance) = $90,000
In this scenario, your maximum credit limit would be $90,000.
Factors That Influence Your HELOC Approval
Credit Score: Higher scores often unlock higher LTV ratios and lower interest rates.
Debt-to-Income (DTI) Ratio: Lenders want to ensure you can afford the potential payments if you draw the full credit line.
Property Appraisal: Since the limit is based on value, a professional appraisal is usually required to confirm the market price.
Occupancy: Primary residences typically qualify for better terms than investment properties or second homes.
Why Use a HELOC?
Homeowners often use HELOCs for high-value needs such as home renovations, debt consolidation, or emergency funds. Because the interest rates are typically lower than personal loans or credit cards, it is a cost-effective way to access large sums of capital.
function calculateHELOC() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var ltvLimit = parseFloat(document.getElementById('ltvLimit').value);
var resultArea = document.getElementById('result-area');
if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(ltvLimit)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (homeValue <= 0) {
alert("Home value must be greater than zero.");
return;
}
var maxTotalDebt = homeValue * (ltvLimit / 100);
var helocLimit = maxTotalDebt – mortgageBalance;
var equity = homeValue – mortgageBalance;
// Handle negative result (when mortgage balance exceeds LTV limit)
if (helocLimit < 0) {
helocLimit = 0;
}
// Display values
document.getElementById('resLtv').innerText = ltvLimit;
document.getElementById('finalResult').innerText = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD'
}).format(helocLimit);
document.getElementById('totalEquity').innerText = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD'
}).format(equity);
var cltv = ((mortgageBalance + helocLimit) / homeValue) * 100;
document.getElementById('cltvCalc').innerText = cltv.toFixed(2);
resultArea.style.display = 'block';
resultArea.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}