Estimate how much equity you can borrow against your home.
75%
80% (Standard)
85%
90%
Most lenders limit combined debt to 80-85% of home value.
Please enter valid positive numbers for all fields.
Your Estimated Results
Maximum Lendable Amount (LTV Cap):
Estimated HELOC Credit Limit:
*This is an estimate. Actual limits depend on credit score, income, and appraisal.
What is a HELOC and How is it Calculated?
A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses your home as collateral. Unlike a standard home equity loan, a HELOC allows you to borrow, repay, and borrow again during a set "draw period," typically 10 years.
Lenders determine your credit limit based on your Combined Loan-to-Value (CLTV) ratio. The calculation follows this specific formula:
HELOC Limit = (Home Value × Lender's Max LTV %) – Current Mortgage Balance
Understanding the Components
Home Value: The current market value of your property, usually determined by a professional appraisal.
LTV Ratio: The percentage of your home's value that a lender is willing to risk. Most banks cap this at 80% to 85% to ensure they have a safety buffer if property values drop.
Mortgage Balance: The total remaining principal on your primary mortgage and any other liens against the property.
Real-World Example
Imagine your home is worth $400,000 and your remaining mortgage is $250,000. If your lender allows an 80% CLTV:
Calculate the total lendable amount: $400,000 × 0.80 = $320,000.
Subtract your existing debt: $320,000 – $250,000 = $70,000.
In this scenario, your maximum HELOC limit would be $70,000.
Factors That Affect Your Approval
While equity is the most important factor, lenders also look at:
Credit Score: A score of 720 or higher typically secures the best interest rates.
Debt-to-Income (DTI) Ratio: Lenders prefer your total monthly debt payments to be below 43% of your gross monthly income.
Income Stability: Proof of consistent employment and earnings.