HELOC Limit Calculator
Calculate how much equity you can borrow from your home.
Your Estimated HELOC Limit:
What is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses your home as collateral. Unlike a standard home equity loan, which provides a lump sum, a HELOC allows you to borrow as needed, pay it back, and borrow again—much like a credit card but with significantly lower interest rates.
How is your HELOC limit calculated?
Lenders determine your credit limit based on several factors, but the primary metric is your Combined Loan-to-Value (CLTV) ratio. Most lenders will allow you to borrow up to 80% or 85% of your home's appraised value, minus what you still owe on your primary mortgage.
The basic formula used by this calculator is:
Realistic Example
Imagine your home is worth $400,000 and your current mortgage balance is $250,000. Your lender has an 80% LTV cap.
- Total borrowing power: $400,000 × 0.80 = $320,000
- Subtract your mortgage: $320,000 – $250,000 = $70,000
- Result: Your maximum HELOC limit would be $70,000.
Key Factors Affecting Your Approval
- Credit Score: Higher scores (720+) usually unlock the best interest rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Lenders look at your monthly income versus your monthly debt obligations to ensure you can handle the new line of credit.
- Appraisal: The "Home Value" used in the calculation must be verified by a professional appraiser chosen by the lender.
Important Considerations
While a HELOC offers flexibility for home renovations, debt consolidation, or emergency funds, remember that your home is the collateral. If you are unable to make payments, you risk foreclosure. Additionally, most HELOCs have variable interest rates, meaning your monthly payments can increase if market rates rise.