HELOC / Home Equity Calculator
Disclaimer: HELOC limits depend on your lender's policies, credit score, and current appraisal. 85% CLTV is a common limit but some lenders go to 90% or cap lower. Rates are variable and tied to Prime.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home — the difference between what your home is worth and what you owe. It works like a credit card: you get a credit limit, draw what you need, and pay interest only on the amount drawn.
How Is the HELOC Limit Calculated?
Most lenders will lend up to 85% of your home's value across all mortgages (called the Combined Loan-to-Value, or CLTV). If your home is worth $500,000 and you owe $300,000:
= ($500,000 × 0.85) − $300,000
= $425,000 − $300,000 = $125,000
HELOC vs. Home Equity Loan
A HELOC is a revolving line of credit with a variable rate — you draw and repay as needed. A home equity loan is a lump sum with a fixed rate and fixed payment. HELOCs are better for ongoing expenses (renovations, tuition); home equity loans are better for one-time costs where you want payment certainty.