Find your available home equity line of credit from your home value, mortgage balance, and the lender's combined loan-to-value limit.
How a HELOC Works
A home equity line of credit (HELOC) is a revolving credit line secured by your home. Instead of a lump sum, you get a credit limit you can draw from as needed during a draw period, paying interest only on what you borrow. It is a flexible way to tap equity for renovations, large expenses, or debt consolidation.
How Much You Can Borrow
Lenders cap your total mortgage debt at a combined loan-to-value ratio, often 80% to 90% of your home's value. Your available HELOC equals that limit minus your existing mortgage balance. With a $450,000 home, an 85% limit, and a $250,000 mortgage, you could borrow up to $382,500 − $250,000 = $132,500.
Draw Period and Repayment Period
A HELOC has two phases. During the draw period, usually 10 years, you can borrow and often pay interest only. After that, the repayment period begins, typically 20 years, when you can no longer draw and must pay principal plus interest — which can sharply raise your payment.
Tip: HELOC rates are usually variable and tied to the prime rate, so your payment can rise. Because the loan is secured by your home, borrow only what you can comfortably repay even if rates climb.
Frequently Asked Questions
How much can I borrow with a HELOC?
Most lenders allow your combined mortgage debt to reach 80% to 90% of your home's value. Your available HELOC is that limit minus your current mortgage balance. Lenders also consider your income and credit.
What is combined loan-to-value (CLTV)?
CLTV is the total of all loans secured by your home divided by its value. If your home is worth $400,000 and you owe $260,000, your CLTV is 65%. Lenders use a maximum CLTV to set your credit limit.
How is HELOC interest charged?
You pay interest only on the amount you actually draw, not the full credit line. Rates are usually variable and tied to the prime rate, so your payment can change as rates move.
What is the draw period on a HELOC?
The draw period is the window, often 10 years, when you can borrow from the line and frequently pay interest only. Afterward, the repayment period begins and you pay down principal and interest.
Is HELOC interest tax deductible?
Interest may be deductible when the funds are used to buy, build, or substantially improve the home that secures the loan, subject to IRS limits. Consult a tax professional for your situation.