HELOC (Home Equity Line of Credit) Calculator
Estimate the maximum credit line available based on your home's value and current mortgage balance.
Most lenders allow 80% to 90%.
Estimated HELOC Limit:
$0.00
How a HELOC Calculation Works
A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses your home as collateral. Lenders determine your credit limit by looking at your Combined Loan-to-Value (CLTV) ratio.
The standard formula used by most banks is:
(Home Value × Max CLTV %) – Remaining Mortgage Balance = HELOC Limit
Key Factors Influencing Your HELOC
- Current Home Value: Determined by a professional appraisal. If home prices in your area have risen, your equity increases.
- Mortgage Balance: The total of all existing liens against the property (Primary mortgage, second mortgage, or solar loans).
- LTV/CLTV Limit: Lenders typically cap the total debt at 80% to 85% of the home's value, though some credit unions may go up to 90% or 100% for high-credit borrowers.
Realistic Example:
Suppose your home is worth $450,000 and your mortgage balance is $250,000. If a lender allows an 85% CLTV:
1. $450,000 × 0.85 = $382,500 (Total Allowable Debt)
2. $382,500 – $250,000 = $132,500 Max HELOC Limit.
Suppose your home is worth $450,000 and your mortgage balance is $250,000. If a lender allows an 85% CLTV:
1. $450,000 × 0.85 = $382,500 (Total Allowable Debt)
2. $382,500 – $250,000 = $132,500 Max HELOC Limit.
Draw Period vs. Repayment Period
Unlike a standard loan, a HELOC usually has two phases. The Draw Period (often 10 years) allows you to borrow money as needed and make interest-only payments. The Repayment Period (often 20 years) follows, where you can no longer withdraw funds and must pay back both principal and interest.
HELOC vs. Home Equity Loan
A HELOC acts like a credit card; you only pay interest on what you use. A Home Equity Loan is a "second mortgage" that provides a lump sum with a fixed interest rate. HELOCs are better for ongoing projects, while Home Equity Loans are better for one-time, large expenses with fixed budgeting.