HELOC Borrowing Power Calculator
Estimate how much equity you can access from your home.
Your HELOC Summary
What is a HELOC?
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, which provides a lump sum, a HELOC works more like a credit card: you have a limit, and you can withdraw funds as needed, pay them back, and borrow again during the "draw period."
How the HELOC Calculation Works
Lenders typically use a Combined Loan-to-Value (CLTV) ratio to determine your borrowing limit. The formula used in this calculator is:
(Home Value × Max CLTV %) – Current Mortgage Balance = Available HELOC
For example, if your home is worth $500,000 and your lender allows an 80% CLTV, your total allowable debt is $400,000. If you currently owe $300,000 on your primary mortgage, your available HELOC would be $100,000.
Key Factors Influencing Your HELOC Limit
- Combined Loan-to-Value (CLTV): Most lenders cap the total debt (mortgage + HELOC) at 80% to 90% of your home's value. High credit scores may qualify for higher ratios.
- Home Appraisal: Your lender will require a professional appraisal to verify the current market value of your property.
- Debt-to-Income (DTI) Ratio: Lenders look at your monthly income compared to your monthly debt obligations to ensure you can manage the payments.
- Credit History: A higher credit score usually results in better interest rates and higher borrowing limits.
HELOC vs. Home Equity Loan
While both use your home as collateral, a HELOC offers flexibility in borrowing and variable interest rates. A Home Equity Loan provides a fixed amount of cash upfront with a fixed interest rate and set monthly payments. HELOCs are often preferred for ongoing projects like home renovations or as an emergency fund.