How Much Can You Borrow Using a HELOC?

The size of the HELOC you can take out will depend on the amount of equity you have built up in your home. The more equity you have, the higher the line of credit you can draw. Your equity will increase when the value of your home increases, and will also increase as you pay off your initial mortgage.

Generally, the HELOC you can take out will be limited to around 75% to 85% of the value of your home, minus the remaining balance on your mortgage. For example, if your home is valued at $500,000, and you still have $250,000 to pay on your mortgage, a HELOC offering 80% of your home's value will provide you with $400,000, less the $250,000 mortgage balance. The line of credit offered by this HELOC would likely be a maximum of $150,000.

Some lenders will not be willing to loan this maximum amount. Your credit rating, income, other assets and debts, will all also affect the maximum line of credit that lenders will offer through a HELOC. Lenders will lower the limit on your line of credit if they believe, based on your income and credit score, that you may not be able to pay back the typical maximum.

HELOCs often allow you to borrow as much as you want, up to the maximum, or as little as you require to meet your financial needs. However, some HELOCs do have a minimum borrowing requirement that is imposed each time you draw on your credit line. Other HELOCs will require you to draw a certain initial amount when you first set up the HELOC. Finally, some HELOCs will require you to maintain a minimum balance amount as long as the HELOC is open, allowing the lender to continue to charge interest. This requirement can equate to having a credit card that you can never close or pay off, but which will continue to charge you interest over time.