HELOC Borrowing Power Calculator
Estimate how much equity you can access from your home.
Total Borrowing Limit (CLTV):
Current Mortgage:
Estimated HELOC Amount:
Warning: Your current mortgage balance exceeds the lending limit for this LTV ratio.
What is a Home Equity Line of Credit (HELOC)?
A Home Equity Line of Credit, or 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 works more like a credit card. You can borrow as much as you need up to a specific limit, pay it back, and borrow again during the "draw period."
How is your HELOC limit calculated?
Lenders typically use a Combined Loan-to-Value (CLTV) ratio to determine your borrowing power. Most lenders allow for a CLTV of 80% to 85%, though some may go higher for borrowers with excellent credit scores. The formula is:
(Home Value × Max CLTV %) – Current Mortgage Balance = Available HELOC
Example Calculation
If your home is worth $400,000 and your lender allows an 85% CLTV:
- Maximum combined debt allowed: $400,000 × 0.85 = $340,000
- If you owe $250,000 on your primary mortgage…
- Your estimated HELOC limit would be: $340,000 – $250,000 = $90,000
HELOC vs. Home Equity Loan
While both use your home's equity, they serve different purposes:
- HELOC: Variable interest rates, flexible borrowing, only pay interest on what you use. Best for ongoing projects or emergency funds.
- Home Equity Loan: Fixed interest rates, one-time lump sum, fixed monthly payments. Best for a single large expense with a predictable cost.
Key Requirements for Approval
- Equity: Usually at least 15-20% equity in the home.
- Credit Score: Typically 620 or higher (720+ for the best rates).
- Debt-to-Income (DTI): Lenders generally prefer a DTI ratio below 43%.
- Proof of Income: Stable employment history and tax returns.