How Much Can I Borrow From My Home Equity

You can typically borrow up to 80-85% of your home's appraised value minus your outstanding mortgage balance, though the exact amount depends on your lender, credit score, and loan type.

The basic math of home equity borrowing

Lenders calculate your usable equity with a simple formula called the loan-to-value ratio, or LTV. You take the appraised value of your home, multiply it by the maximum LTV percentage (usually 80% or 85%), then subtract what you still owe on your first mortgage. The result is the maximum lump sum or credit line you can access. For a concrete example: say your home appraises at a value that, combined with your remaining mortgage balance, leaves you with a specific amount of available equity. That figure is what your lender will start from, but it’s not the final offer, it’s the theoretical maximum before they pull your credit report and tax returns. The exact dollar figure depends on your lender’s current pricing, which is set by each financial institution and changes regularly; you must check the official website of your specific lender for a binding quote.

Why your borrowing limit might be lower

Your actual approval amount often falls below that theoretical maximum because lenders layer on two additional checks: your credit score and your debt-to-income ratio. Most conventional lenders want a FICO score of at least 620 for a home equity loan, but if your score is 680 or below, they may drop the LTV cap from 85% to 75% or 70%. That single change can cut your available equity dramatically, a swing of tens of thousands of dollars depending on your home’s value. Your debt-to-income ratio matters just as much. If your monthly debts (car loan, credit cards, student loans, plus the new home equity payment) exceed 43% of your gross monthly income, the lender will reduce the loan amount to bring you under that line. For example, if you earn a certain amount per month and already pay a specific sum in debts, you can only afford a new payment capped by that 43% threshold. At a given interest rate and term, that caps your loan at a figure set by the math of your debt load, even if the LTV math said you could borrow more. Lenders also apply “overlays,” which are stricter internal caps. A credit union might cap LTV at 80% for all home equity products, while a national bank might require a minimum loan amount, forcing you to borrow more than you need. The failure case is simple: you have plenty of equity, but your credit score or debt load makes the lender nervous, so they shrink the offer to a level you can safely repay. Any minimum or maximum loan amount is a price set by the individual lender and expires when their rate sheet updates; consult the lender’s official site for the figure valid today.

How the loan type changes the percentage

The type of loan you choose changes the LTV cap. A home equity loan (a fixed-rate, lump-sum second mortgage) typically allows up to 85% LTV, but many lenders cap it at 80% if you want a 20-year term. A HELOC (home equity line of credit) often allows the same 85%, but the draw period and variable rate make lenders slightly more conservative, some cap HELOCs at 80% LTV. Cash-out refinances are different because they replace your first mortgage. For a conventional cash-out refi, the combined loan-to-value (CLTV) cap is usually 80%, meaning you can borrow up to 80% of the home’s value across both the old and new loans. So on a home with a given value, you could take out a new mortgage for 80% of that value, pay off the existing balance, and walk away with the difference in cash. FHA and VA loans have special exceptions. An FHA cash-out refinance allows up to 80% LTV, but it requires mortgage insurance premiums for the life of the loan, which raises your effective cost. A VA cash-out refinance for eligible veterans and active-duty service members allows up to 90% LTV, meaning you can borrow up to 90% of your home’s value, leaving just 10% in equity. That’s the highest standard cap you’ll find, but it’s reserved for military borrowers. Also note that if you have a HELOC and you sell your home, the line of credit is paid off at closing from the sale proceeds, you don’t pay it separately. This matters because a HELOC’s variable rate can swing your payment, but the principal is due in full when the property transfers. For most homeowners, the 80-85% rule is the safe default; the VA’s 90% is the outlier, and FHA’s 80% is the conservative floor. Every LTV cap and cash-out limit mentioned here is a pricing parameter set by each lender, not a permanent market fact, and you must verify the current number on the lender’s official website.

Frequently asked questions

How long does it take to get approved for a home equity loan?

Approval typically takes two to four weeks from application to closing, depending on how quickly you provide pay stubs, tax returns, and the appraisal. An online lender might move faster, but a full appraisal, required when borrowing more than 80% LTV, adds five to ten business days.

Can I borrow more than 85% LTV if I have excellent credit?

Rarely. A few credit unions and community banks offer 90% LTV on home equity loans, but they charge higher interest rates and require a 740+ FICO score and six months of cash reserves. The VA’s 90% cash-out program is the only common exception that doesn’t require perfect credit.

Do I need a home appraisal for a small equity loan?

Yes, for most loans. Even a small home equity loan requires an appraisal or an automated valuation model (AVM) if the loan amount is below a certain threshold and the LTV is under 80%. The lender needs a current value to confirm you’re not borrowing more than the home is worth. The specific dollar threshold that triggers a full appraisal versus an AVM is set by each lender and changes with their risk policies; confirm the current rule on your lender’s official site.

What happens to my HELOC if I never use the full line?

You pay nothing on the unused portion during the draw period (usually 10 years). After the draw period ends, you enter a repayment period of 10-20 years where you must pay back the principal and interest, regardless of whether you used the full amount.

When you borrow from my home equity, the maximum you can access is not a single public number but a lender-specific calculation that combines your property’s appraised value, your outstanding mortgage, and the lender’s current LTV cap. That cap is a price with an expiry date, set by each financial institution, and the only place to get a binding figure is the lender’s official website.