How much HELOC can I get?
A home equity line of credit, or HELOC, allows homeowners to access cash by borrowing against the equity they have in their homes.
The maximum HELOC amount you can borrow will depend on the value of your home, what you owe on your current mortgage, and what percentage of the home value your lender will let you cash out. Most lenders let you borrow up to 85% but some will go higher—up to 90% or even 100%.
Check your maximum HELOC amount. Start hereIn this article (Skip to...)
- HELOC limits
- How limits are set
- What impacts your HELOC amount?
- Alternatives to a HELOC
- HELOC limits FAQ
HELOC loan limits
Mortgage lenders determine the loan limit on a HELOC by offering a portion of your home’s value as your credit limit.
The maximum HELOC amount is shown as a percentage (usually 85%), which represents the amount you can borrow against your home in total—including your HELOC and anything you own on your existing home loan. This is known as your combined loan-to-value (CLTV).
Check your maximum HELOC amount. Start hereLender guidelines vary, but the average HELOC limit offered by most lenders is 80% to 85%. That means your HELOC amount and your current mortgage balance, when combined, can’t exceed 80%-85% of the home’s appraised value. Some lenders allow up to 90%, and some even as high as 100%. The higher your HELOC LTV ratio, the higher your interest rate.
- Typically, HELOCs that exceed 90% of the home’s value are only offered by lenders that issue memberships (i.e., credit unions).
- Lenders can impose dollar limits on HELOCs as well as CLTV limits. Dollar limits vary by lender; $10,000 to $25,000 are “normal” lower limits often borrowed, while higher HELOC limits can range as high as $1,000,000.
How lenders determine your maximum HELOC amount
The maximum HELOC amount you qualify for depends on your home equity, credit score, and your lender’s max HELOC LTV. Most lenders allow borrowing up to 85% LTV, but your specific HELOC limits vary.
To estimate your max HELOC amount, start by calculating your LTV. For example, if your home is worth $500,000 and you owe $350,000, your LTV is 70% ($350,000 ÷ $500,000).
Check your maximum HELOC amount. Start hereSince many lenders set a HELOC borrowing limit at 85% LTV, you may qualify to borrow against the remaining 15% of your home’s value. Let’s break down how a lender might calculate your HELOC amount limit in this scenario:
| Home Value | $500,000 |
| Current Mortgage Balance | $350,000 |
| Maximum LTV | 85% (0.85) |
| Maximum Total Balance (Mortgage + HELOC) | $425,000 ($500,000 x 0.85) |
| Maximum HELOC Amount (Total Balance - Mortgage) | $75,000 |
Numbers are for example purposes only. Your own loan amount will be different.
Other factors that impact your max HELOC limits
Besides your home’s value, current mortgage balance, and lender guidelines, other factors may also affect your maximum HELOC amount.
Verify your HELOC eligibility. Start hereCredit score
The higher your credit score, the more likely you are to qualify for a low interest rate on your HELOC. A low rate helps increase your borrowing power. On the flip side, a poor credit score may hurt your chance of qualifying, or it could mean a higher interest rate and a lower loan amount if you do qualify. Most lenders require credit scores of 660 to 700 for a HELOC.
Interest rate
Your HELOC rates depend on your creditworthiness, financial situation, and the overall prime rate. Since home equity loans and HELOCs are considered second mortgages, their interest rates are usually higher than primary mortgage rates.
Debt-to-income ratio
Your debt-to-income ratio (DTI) will determine just how much you can afford to borrow when qualifying for a HELOC. Debts included in your DTI include your current mortgage loan payment, credit card minimum payments, and payments on other installment loans like student or car loans. Child support and alimony payments are also included.
The less money you spend on other existing debts each month, the more you can borrow on a HELOC. The lender will require proof of employment and income in order to calculate your DTI. Typically, a HELOC requires a lower DTI than a traditional mortgage.
New home appraisal
When you apply for a HELOC, your lender may require a new home appraisal. Your home’s appraised value is important because it’s used to calculate the amount of equity in your home. A higher appraised value can increase your HELOC amount limit, making it easier to qualify for a larger credit line.
Verify your HELOC eligibility. Start here
Alternatives to a HELOC
Homeowners looking for cash aren’t limited to a home equity line of credit—there are other financing options to consider.
Verify your HELOC eligibility. Start hereHome Equity Loan
Similar to a personal loan, a home equity loan uses your home equity as collateral, resulting in a potentially lower interest rate. Concurrently with your regular mortgage payments, you would make an additional payment for the home equity loan, distinct from a HELOC.
Unlike a HELOC, a home equity loan provides an initial lump sum and requires regular, fixed monthly payments until the entire loan amount is repaid. These loans are ideal for home renovations or debt consolidation, offering flexibility in spending, whether it’s for purchasing a car or making a down payment on a vacation home.
Check your home equity loan options. Start hereCash-out refinance
A cash-out refinance involves replacing your existing mortgage with a new one that has a higher principal amount, allowing you to receive the difference in cash. This option is considered a good alternative to a Home Equity Line of Credit (HELOC) for several reasons.
Firstly, a cash-out refinance often provides lower interest rates compared to HELOCs, making it a cost-effective choice for accessing cash. Additionally, it consolidates your existing mortgage and the additional funds you need into a single loan, streamlining your financial obligations.
Furthermore, a cash-out refinance provides a lump sum of money upfront, similar to a home equity loan, but with the advantage of potentially securing a more favorable interest rate.
Check your cash-out refinance eligibility. Start here
HELOC loan limits FAQ
Verify your HELOC eligibility. Start hereThe max HELOC amount you can qualify for depends on your home equity, credit score, and lender’s loan-to-value ratio (LTV). Most lenders allow homeowners to borrow up to 80-90% LTV, minus their outstanding balance. For example, if your home is worth $500,000 and your lender allows a max HELOC LTV of 85%, your HELOC limit could be $75,000 if you owe $350,000 on your current mortgage balance.
Yes, some lenders offer a HELOC based on 90% LTV, but approval depends on your credit score, debt-to-income ratio, and overall personal finances. Borrowing at 90% LTV may result in a higher annual percentage rate and additional origination or annual fees.
Most lenders offer HELOCs up to 85%. Some credit unions offer high-LTV HELOCs up to 100% of your home’s value, but these are far less common.
Yes, your HELOC limits can change based on the real estate market, your credit score, and your lender’s policies. If your home’s market value drops, your lender may reduce your credit line, even if you haven’t borrowed the full amount. Changes in variable interest rates and DTI can also affect HELOC limits.
You may be able to increase your maximum HELOC amount limit by requesting a credit limit increase from your mortgage lender. This typically requires a new home appraisal, a credit score review, and proof of income. If your home equity has grown or your DTI has improved, you may qualify for a higher maximum amount.
The cost of a home equity line of credit depends on factors like your closing costs, annual fees, and whether you have a fixed rate. A HELOC loan may have a variable interest rate, meaning monthly payments can fluctuate. Some lenders charge an origination fee, and others require minimum withdrawals, which can add to your overall costs.
HELOCs typically have a draw period during which you can access funds, followed by a repayment period. The draw period may only require interest payments, but the repayment period requires principal and interest.
You can use your HELOC loan for home improvement projects, debt consolidation, real estate investments, or large expenses like education and medical bills. Many homeowners use a HELOC instead of a personal loan or credit card due to potentially lower fixed interest rates and flexible repayment terms.
Discover your maximum HELOC amount
A home equity line of credit is a great way to leverage the value of your home and ensure you have funds available when you need them. And, the interest-only payment option means you have the option of making lower monthly payments if needed.
If you need money due to a layoff or furlough, to make home repairs or renovations, or simply to consolidate high-interest credit card debt, a HELOC can be an easy and inexpensive way to access cash. Many lenders offer HELOCs so be sure to shop around and compare HELOC rates, terms, and costs offered.
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