Estimate how much credit you can access based on your home's equity.
Your Estimated Credit Line:
$0
Understanding Home Equity Lines of Credit (HELOC)
A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows homeowners to borrow against the equity they have built up in their property. Unlike a standard home equity loan, which provides a lump sum, a HELOC functions more like a credit card with a limit based on your home's value.
How the Calculation Works
Lenders generally follow a specific formula to determine your borrowing capacity. This involves calculating the Loan-to-Value (LTV) ratio. Here is the step-by-step math:
Step 1: Multiply your home's appraised value by the lender's maximum LTV percentage (usually 80% to 85%).
Step 2: Subtract your existing mortgage balance from that total.
Step 3: Subtract any other outstanding liens on the property.
Result: The remaining amount is your maximum HELOC limit.
Real-World Example
Imagine your home is valued at $450,000. Your lender allows for a 85% LTV limit. Your current mortgage balance is $250,000.
$450,000 x 0.85 = $382,500 (Maximum total debt allowed)
$382,500 – $250,000 = $132,500 (Your HELOC limit)
Why Use a HELOC?
Homeowners often use HELOCs for high-value expenses such as home renovations, debt consolidation, or emergency funds. The primary advantage is flexibility; you only pay interest on the amount you actually draw, not the entire limit. However, it is important to remember that your home serves as collateral, meaning default could lead to foreclosure.
function calculateHELOC() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var ltvLimit = parseFloat(document.getElementById('ltvLimit').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var otherLiens = parseFloat(document.getElementById('otherLiens').value);
// Error handling
if (isNaN(homeValue) || isNaN(ltvLimit) || isNaN(mortgageBalance)) {
alert("Please enter valid numbers for home value, LTV limit, and mortgage balance.");
return;
}
if (isNaN(otherLiens)) {
otherLiens = 0;
}
// Math: (Value * (LTV/100)) – (Mortgage + Liens)
var ltvDecimal = ltvLimit / 100;
var maxDebtAllowed = homeValue * ltvDecimal;
var currentDebt = mortgageBalance + otherLiens;
var availableHELOC = maxDebtAllowed – currentDebt;
// Display result
var resultBox = document.getElementById('helocResultBox');
var amountDisplay = document.getElementById('helocAmount');
var summaryDisplay = document.getElementById('helocSummary');
resultBox.style.display = 'block';
if (availableHELOC <= 0) {
amountDisplay.innerHTML = "$0";
amountDisplay.style.color = "#e53e3e";
summaryDisplay.innerHTML = "Based on these numbers, you currently do not have enough equity to qualify for a HELOC under this LTV limit.";
} else {
amountDisplay.innerHTML = "$" + availableHELOC.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
amountDisplay.style.color = "#2f855a";
summaryDisplay.innerHTML = "This estimate assumes a total allowable debt of $" + maxDebtAllowed.toLocaleString() + " (" + ltvLimit + "% of value) minus your existing obligations of $" + currentDebt.toLocaleString() + ".";
}
// Smooth scroll to result
resultBox.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}