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 works more like a credit card: you have a maximum limit, and you can borrow against it, pay it back, and borrow again during the "draw period."
How is Your HELOC Limit Calculated?
Lenders determine your credit limit based on several factors, but the primary metric is the 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 Formula:
(Home Value × Maximum CLTV %) – Remaining Mortgage Balance = HELOC Limit
Example Calculation
Imagine your home is currently worth $450,000 and your current mortgage balance is $250,000. Your lender allows a max CLTV of 85%.
Step 2: Subtract current mortgage ($382,500 – $250,000) = $132,500.
Result: Your maximum HELOC limit would be $132,500.
Key Factors Lenders Consider
While this calculator provides an estimate based on equity, lenders will also evaluate:
Credit Score: Higher scores typically unlock higher CLTV limits and lower interest rates.
Debt-to-Income (DTI) Ratio: Lenders want to ensure you can afford the monthly payments.
Appraisal: A professional appraisal will be required to verify the actual value of the property.
function calculateHELOC() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value);
var cltvLimit = parseFloat(document.getElementById("cltvLimit").value);
var resultBox = document.getElementById("helocResultBox");
var outputText = document.getElementById("helocOutputText");
if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(cltvLimit)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (homeValue <= 0 || cltvLimit <= 0) {
alert("Please enter positive values for home value and CLTV limit.");
return;
}
var decimalCltv = cltvLimit / 100;
var maxTotalDebt = homeValue * decimalCltv;
var availableEquity = maxTotalDebt – mortgageBalance;
resultBox.style.display = "block";
if (availableEquity <= 0) {
outputText.innerHTML = "Estimated Limit: $0Based on the values provided, your current mortgage exceeds the allowable loan-to-value limit. You may need more equity or a higher CLTV threshold to qualify.";
} else {
var formattedResult = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
}).format(availableEquity);
var formattedMaxDebt = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
}).format(maxTotalDebt);
outputText.innerHTML = "Your Estimated HELOC Limit: " + formattedResult + "" +
"" +
"This assumes a maximum total debt of " + formattedMaxDebt + " (" + cltvLimit + "% of your home's value) " +
"minus your existing balance of " + new Intl.NumberFormat('en-US', {style: 'currency', currency: 'USD', maximumFractionDigits: 0}).format(mortgageBalance) + ".";
}
resultBox.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}