HELOC Maximum Limit Calculator
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Total Equity in Home:
Maximum Total Debt Allowed:
Estimated HELOC Limit:
What is a Home Equity Line of Credit (HELOC)?
A HELOC is a revolving line of credit secured by your home. It works similarly to a credit card, where you have a maximum credit limit and you only pay interest on the amount you actually borrow. Because it is secured by your property, HELOCs typically offer lower interest rates than personal loans or credit cards.
How to Calculate Your HELOC Limit
Lenders use a metric called the Combined Loan-to-Value (CLTV) ratio to determine how much you can borrow. The standard calculation follows these steps:
- Determine Home Value: The current market appraisal of your property.
- Apply CLTV Limit: Most lenders allow a CLTV of 80% to 85%. Multiply your home value by this percentage.
- Subtract Existing Debt: Subtract your current mortgage balance from the figure calculated in step 2. The remaining amount is your estimated line of credit.
Example Calculation
Suppose your home is worth $400,000 and your lender allows an 85% CLTV. Your total allowable debt would be $340,000 ($400,000 x 0.85). If you still owe $250,000 on your primary mortgage, your estimated HELOC limit would be $90,000 ($340,000 – $250,000).
Factors That Impact Your Approval
While equity is the primary factor, lenders will also evaluate your credit score (typically 620+ required), your debt-to-income (DTI) ratio, and your history of steady employment. A higher credit score often unlocks higher CLTV limits and lower interest rates.