What Are the Requirements to Take Out a HELOC?
You will need to first build up equity in your home, typically at least 15% to 20%, in some cities as much as 35%, of the total value of the home. HELOC lenders will also require you to have a certain maximum debt-to-income ratio, typically 40%, and a credit score of at least 620.
You can typically borrow up to 75% to 85% of the value of your home, minus the amount you still owe on your mortgages attached to that home. You should aim to have a high credit score and secure monthly income to take full advantage of a HELOC's benefits.
A high credit score and regular monthly income will also enable you to qualify for lower interest rates.
- What Is a Home Equity Line of Credit (HELOC)?
- How Much Does a HELOC Lower My Interest Rate?
- Should I Choose a HELOC or a Home Equity Loan?
- How Does a HELOC Work?
- What Are the Benefits of a HELOC?
- What Are the Drawbacks of a HELOC?
- What Are the Most Common Reasons to Use a HELOC?
- How Much Can You Borrow Using a HELOC?
- How Is My HELOC Rate Calculated?
- Should I Use a HELOC to Lower My Debt Payments?