Estimate your potential Home Equity Line of Credit (HELOC) borrowing power.
Your HELOC Limit: $0
Understanding Your HELOC Limit
A Home Equity Line of Credit (HELOC) is a revolving credit line that uses your home's equity as collateral.
Unlike a home equity loan, which provides a lump sum, a HELOC allows you to draw funds as needed up to a
pre-approved limit, and you only pay interest on the amount you borrow. The maximum amount you can borrow
is determined by your home's equity and the lender's maximum Loan-to-Value (LTV) ratio.
How the HELOC Calculator Works
This calculator helps you estimate the potential borrowing limit for a HELOC based on three key inputs:
Current Home Value: The estimated market value of your home.
Current Mortgage Balance: The remaining amount owed on your primary mortgage.
Desired Loan-to-Value (LTV) Ratio: The maximum percentage of your home's value that you,
or the lender, are comfortable leveraging. Lenders typically cap this at 80% or 85%, but some may go up to 90%.
A lower LTV indicates less risk for the lender and borrower.
The Calculation Formula
The calculator uses the following formula to determine your estimated HELOC limit:
HELOC Limit = (Current Home Value * (Desired LTV Ratio / 100)) – Current Mortgage Balance
Step 1: Calculate Maximum Loan Amount
Multiply your home's current value by the desired LTV ratio (expressed as a decimal). This gives you the maximum
total loan amount (primary mortgage + HELOC) that the lender would typically allow against your home.
Maximum Loan Amount = Current Home Value * (Desired LTV Ratio / 100)
Step 2: Calculate HELOC Limit
Subtract your current outstanding mortgage balance from the maximum loan amount calculated in Step 1. The result
is the estimated maximum amount you could potentially borrow through a HELOC.
HELOC Limit = Maximum Loan Amount – Current Mortgage Balance
Example:
Let's say:
Your Home Value = $500,000
Your Current Mortgage Balance = $300,000
You desire an LTV Ratio of 85%
First, calculate the maximum loan amount:
$500,000 * (85 / 100) = $500,000 * 0.85 = $425,000
Next, subtract your current mortgage balance:
$425,000 – $300,000 = $125,000
In this scenario, your estimated HELOC limit would be $125,000.
Important Considerations
This calculator provides an estimate only. Actual HELOC limits are subject to lender approval, credit score, income verification,
appraisal results, and specific lender policies. It's always recommended to consult with multiple lenders and a financial advisor
to get personalized offers and advice. Remember that a HELOC is a secured loan, and failure to repay could result in foreclosure.
function calculateHELOC() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var currentMortgageBalance = parseFloat(document.getElementById("currentMortgageBalance").value);
var loanToValueRatio = parseFloat(document.getElementById("loanToValueRatio").value);
var resultDiv = document.getElementById("result");
// Clear previous results/errors
resultDiv.innerHTML = "Your HELOC Limit: $0";
resultDiv.style.color = "#004a99";
resultDiv.style.backgroundColor = "#e7f3ff";
resultDiv.style.borderColor = "#004a99";
// Input Validation
if (isNaN(homeValue) || homeValue <= 0) {
resultDiv.innerHTML = "Please enter a valid current home value.";
resultDiv.style.color = "#dc3545";
resultDiv.style.backgroundColor = "#f8d7da";
resultDiv.style.borderColor = "#dc3545";
return;
}
if (isNaN(currentMortgageBalance) || currentMortgageBalance < 0) {
resultDiv.innerHTML = "Please enter a valid current mortgage balance.";
resultDiv.style.color = "#dc3545";
resultDiv.style.backgroundColor = "#f8d7da";
resultDiv.style.borderColor = "#dc3545";
return;
}
if (isNaN(loanToValueRatio) || loanToValueRatio 90) {
resultDiv.innerHTML = "Please enter a valid LTV ratio between 1% and 90%.";
resultDiv.style.color = "#dc3545";
resultDiv.style.backgroundColor = "#f8d7da";
resultDiv.style.borderColor = "#dc3545";
return;
}
var maxLoanAmount = homeValue * (loanToValueRatio / 100);
var helocLimit = maxLoanAmount – currentMortgageBalance;
// Ensure HELOC limit is not negative
if (helocLimit < 0) {
helocLimit = 0;
resultDiv.innerHTML = "Your HELOC Limit: $0 (Insufficient equity based on inputs)";
resultDiv.style.color = "#ffc107";
resultDiv.style.backgroundColor = "#fff3cd";
resultDiv.style.borderColor = "#ffc107";
} else {
resultDiv.innerHTML = "Your HELOC Limit: $" + helocLimit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
resultDiv.style.color = "#004a99";
resultDiv.style.backgroundColor = "#e7f3ff";
resultDiv.style.borderColor = "#004a99";
}
}