HELOC Calculator
Estimate how much credit you can access from your home equity.
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Lenders typically allow 80% to 90%.
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Include all existing loans against the property.
Total Collateral Value:
$0
Current Debt:
$0
Estimated HELOC Limit:
$0
Warning: Your current mortgage balance exceeds the lending limit for the selected CLTV.
What is a Home Equity Line of Credit (HELOC)?
A Home Equity Line of Credit, or HELOC, is a revolving line of credit secured by your home. Think of it like a credit card where your house acts as collateral. It allows you to borrow against the equity you've built in your property, usually at a lower interest rate than personal loans or credit cards.
How the HELOC Limit is Calculated
Lenders determine your maximum credit limit using a formula called the Combined Loan-to-Value (CLTV) ratio. Here is the step-by-step math used in this calculator:
- Determine Home Value: The current market appraisal of your home.
- Apply the CLTV Cap: Lenders usually cap the total debt (Mortgage + HELOC) at 80% to 90% of the home's value.
- Subtract Existing Debt: Deduct your remaining primary mortgage balance from that capped amount.
Realistic Example:
If your home is worth $400,000 and your lender allows an 85% CLTV, your total borrowing limit is $340,000. If you still owe $250,000 on your mortgage, your maximum HELOC limit would be:
$340,000 – $250,000 = $90,000.
If your home is worth $400,000 and your lender allows an 85% CLTV, your total borrowing limit is $340,000. If you still owe $250,000 on your mortgage, your maximum HELOC limit would be:
$340,000 – $250,000 = $90,000.
Factors That Affect Your HELOC Eligibility
1. Credit Score
While equity is the primary factor, your credit score determines the interest rate and the maximum CLTV percentage a lender is willing to offer. Higher scores (740+) typically unlock 90% CLTV options.
2. Debt-to-Income (DTI) Ratio
Lenders look at your monthly income versus your monthly debt obligations. Most lenders prefer a DTI ratio below 43% to ensure you can handle the variable interest payments of a HELOC.
3. Appraisal Accuracy
The "Home Value" you use in this calculator is an estimate. During a real application, the lender will require a professional appraisal, which might be higher or lower than your personal estimate.
HELOC vs. Home Equity Loan
While both use your home as collateral, they function differently:
- HELOC: Revolving credit. You only pay interest on what you use. Variable interest rates. Flexible draw period (usually 10 years).
- Home Equity Loan: Lump sum payment. Fixed interest rates. Fixed monthly payments over 5 to 30 years.