How Much Can You Borrow With a Home Equity Loan?
UpdatedApr 14, 2025
- Home equity lenders typically loan up to 80-85% of your property value.
- The amount you can borrow depends on the appraised value of your property, your mortgage balance, your debt-to-income ratio, your credit history, and the lender’s loan limit.
- There are three types of home equity loans, each with pros and cons.
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If you own a home and you need cash for a financial emergency, or to pay for renovations or consolidate debt, you might turn to a home equity loan to cover these expenses. This lets you borrow against your home's value, often at a lower interest rate compared to other kinds of loans.
Many lenders let you borrow up to 80-85% of your home's appraised value. We’ll walk you through how to calculate loan amounts, how to qualify, home equity loan types, and how much you might qualify to borrow.
How much can you borrow with a home equity loan or line of credit?
Two key factors limit how much you can borrow with a home equity loan. The first is a dollar limit set by the lender. This varies by bank.
Second is the lender’s combined loan-to-value limit (CLTV). Loan-to-value means the amount you owe on your home compared to your home’s value. When you want to borrow against your home equity, the lender looks at your current mortgage balance (if you have one) and the home equity loan you want. They’ll add both loans together and compare the total to your home’s value.
CLTV example
Let’s say the lender’s maximum CLTV is 80%. Your home is worth $500,000, and you still owe $250,000 on your mortgage.
For this lender, your maximum CLTV will be $400,000 because that’s 80% of your home’s value. Since you still owe $250,000 on your mortgage, that means you could apply for a $150,000 home equity loan (or less) and still be under the lender’s maximum CLTV.
| Appraised home value | 80% of value | Mortgage balance | Home equity loan limit |
|---|---|---|---|
| $500,000 | $400,000 | $250,000 | $150,000 |
The lender will verify the value of your home, but you could get an idea by checking online real estate websites.
How do you qualify for a home equity loan?
Appraised value isn’t the only factor your lender will consider. A lender also looks at things like:
Your income. Lenders like to make sure that you have a regular source of income so you'll have a way to pay back the loan. You may need to provide W-2s and pay stubs to prove your income is consistent over time.
Your credit score. Each lender decides what its minimum credit score for a home equity loan will be. A higher score could help you get a lower interest rate, but you might still qualify with a lower score.
Your credit history. Most lenders will be interested in the types of accounts you have open, your payment history, and whether you have any outstanding balances in collections. If you have a lot of outstanding debt, you may not qualify (even with good credit).
Your debt-to-income (DTI) ratio. The percentage of your overall monthly income that goes to paying debt and housing is called your debt-to-income ratio (DTI). A high DTI means there might not be room in your budget for a new loan payment. A DTI at or below 43% could help you get the loan you want, but some lenders allow a higher DTI.
These are just some of the indicators lenders use to assess your ability to repay your loan. They can also look into your employment situation, recent applications for other new credit accounts, and other factors.
What are your home equity loan options?
If you meet the lender’s qualifications, you may qualify for a home equity loan. You could have several possibilities. Here are the three standard home equity loans.
Cash-out refinance loan
With the cash-out refinance method, you pay off your existing mortgage with a new, larger loan. Then you get the difference back in cash that you can spend. Cash-out refi loans replace your current mortgage.
Cash-out refi loans are worth considering if you can qualify for a lower rate than you’re paying on your current mortgage, and you want to borrow extra cash at the same time.
Home equity line of credit (HELOC)
A home equity line of credit (HELOC) is a type of second mortgage. It works much like a credit card. You get a line of credit and can borrow from it whenever you want, up to your loan limit. You control how much you borrow at any given time. If you pay back some of what you've borrowed over time, you replenish your available credit and could borrow more if you need to.
The borrowing period on a HELOC typically lasts for five to 10 years. This is called the draw period. When the draw period ends, you enter the repayment period and can’t borrow more.
The interest rates on HELOCs tend to be lower than the rates on personal loans and credit cards because HELOCs are guaranteed by your home. Like credit card interest rates, many HELOC interest rates are variable and could fluctuate over time.
HELOCs may be a good option if you have several upcoming expenses you need to cover.
Traditional home equity loan
A home equity loan is a one-time lump-sum loan guaranteed by your home. Like HELOCs, home equity loans are second mortgages and tend to have lower interest rates compared to personal loans and credit cards. Many traditional home equity loans carry fixed rates and fixed monthly payments for the life of the loan.
A home equity loan could be a good choice if you need a large amount of cash all at once. Many people use traditional home equity loans to pay off debt, cover a home renovation project, or pay off student loans. It's possible to get a home equity loan with bad credit too, though that's ultimately up to the lender to decide.
The interest you pay on a cash-out refinance loan, HELOC, or home equity loan may be tax deductible. Talk to a qualified tax advisor about your situation.
What fees and other costs will you have to pay?
Similar to your original mortgage, there are fees and closing costs associated with home equity loans. These vary depending on the lender, but could range from 3% to 6% of the total loan amount. You may have to pay for:
Loan origination (a fee the lender charges for making the loan)
Home appraisal
Loan application
Attorney
Title search
Paperwork filed
Credit report
Property tax proof
Flood evaluation certificate (if applicable)
Some lenders may let you roll these costs into the home equity loan itself so you don't have to pay cash out of pocket.
Deciding if a home equity loan is right for you
If you’re asking, “How much can you borrow on a home equity loan?” then you already understand one of the benefits of home ownership. It's not just about having your own space. Home ownership can also give you access to a financial reserve you can draw upon as needed.
Read Next: 5 Smart Ways to Use Your Home Equity
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during November 2024. The data uncovers various trends and statistics about people seeking debt help.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In November 2024, people seeking debt relief had an average of 79% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In November 2024, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
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