HELOC Maximum Borrowing Power Calculator
Your HELOC Estimate
Total Home Equity: $0.00
Maximum Combined Loan Amount: $0.00
Estimated Max HELOC Limit: $0.00
Understanding Your HELOC Maximum Limit
A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses your home as collateral. Unlike a traditional home equity loan, which provides a lump sum, a HELOC allows you to borrow as needed up to a specific limit, much like a credit card.
The 80% LTV Rule
Most lenders use a Loan-to-Value (LTV) ratio to determine your borrowing power. Typically, lenders allow for a combined LTV (CLTV) of up to 80%. This means the total of your existing mortgage plus your new HELOC cannot exceed 80% of your home's current appraised market value.
Example Calculation
If your home is worth $500,000 and you still owe $300,000 on your primary mortgage:
- 1. Determine the LTV Cap: $500,000 × 0.80 = $400,000.
- 2. Subtract Current Mortgage: $400,000 – $300,000 = $100,000.
- Maximum HELOC Amount: $100,000.
Factors That Affect Your Eligibility
While equity is the primary factor, lenders also evaluate the following before approving a line of credit:
- Credit Score: A higher score (usually 700+) secures better interest rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Lenders prefer a DTI below 43% to ensure you can manage the monthly payments.
- Appraisal: A professional appraisal will be required to verify the current market value of your property.
| Home Value | Mortgage Balance | 80% LTV Limit | Est. HELOC |
|---|---|---|---|
| $350,000 | $200,000 | $280,000 | $80,000 |
| $600,000 | $400,000 | $480,000 | $80,000 |
| $800,000 | $450,000 | $640,000 | $190,000 |