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So you’ve accrued a quarter million in home equity, and you want to pursue a home equity line of credit (HELOC)? That begs the question: How much HELOC can I get with 250k in equity?
Having $250,000 in equity doesn’t mean you can automatically borrow $250,000 from your HELOC.
How much HELOC you can access will depend on your home’s current value, what you still owe your lender, the lender’s combined loan-to-value (CLTV) limit, and other factors. Most lenders allow up to 80% to 85% CLTV; some, like Better, may allow up to 90% CLTV for borrowers who qualify.
...in as little as 3 minutes – no credit impact
How lenders calculate your HELOC limit — the CLTV formula
Your combined loan-to-value (CLTV) ratio is the total amount of existing outstanding debt you have relative to the value of your home.
Lenders calculate CLTV by taking the total outstanding balances of all your mortgage loans and adding to that the amount you wish to borrow on a HELOC. Then they divide that sum by the appraised value of your property.
Here’s the formula:
CLTV = (all current mortgage balances + new HELOC limit) ÷ appraised home value
Note that most lenders allow a max CLTV of 80% to 85%.
“Lenders limit the CLTV on a second mortgage like a HELOC to reduce their risk by ensuring the borrower maintains a certain stake in the property,” explains Dennis Shirshikov, a professor of finance and economics at City University of New York/Queens College.
Josh Katz, CPA, and founder of Universal Tax Professionals, agrees.
“Lenders cap CLTV because they need a cushion. If you default and they have to sell your home, a drop in the market still leaves enough to cover your debt,” he says.
A CLTV example
So let’s assume you have $250,000 in home equity. Here’s what you’d be able to draw from a HELOC, based on the CLTV allowed:
| Home value | Current mortgage balance | Home equity | Max HELOC at 80% CLTV | Max HELOC at 85% CLTV |
|---|---|---|---|---|
| $350,000 | $100,000 | $250,000 | $180,000 | $197,500 |
| $450,000 | $200,000 | $250,000 | $160,000 | $182,500 |
| $600,000 | $350,000 | $250,000 | $130,000 | $160,000 |
“Notice the pattern,” says personal finance expert Andrew Lokenauth. “The higher your home value relative to your equity – meaning the more you still owe – the smaller your HELOC borrowing limit, even with identical equity.”
How Better's 90% CLTV limit differs from the industry standard
But imagine if your CLTV was 90% instead of 80% or 85%. This increases the maximum amount you can draw from a HELOC, at the upper end by as much as $60,000 (compared to a CLTV of 80%), as demonstrated below:
| Home value | Current mortgage balance | Home equity | Max HELOC at 90% CLTV |
|---|---|---|---|
| $350,000 | $100,000 | $250,000 | $215,000 |
| $450,000 | $200,000 | $250,000 | $205,000 |
| $600,000 | $350,000 | $250,000 | $190,000 |
Credit score's effect on your HELOC limit
Your credit score impacts whether you qualify for a HELOC as well as the size of the credit limit.
“Most lenders want a score around 620 as a baseline, but that gets you the smallest lines and the worst rates. If you want a lender that stretches to 90% CLTV, aim to have a score well above 700,” says Lokenauth.
He adds that it’s common for borrowers to get offered vastly different borrowing limits from two different banks purely because one lender weighted the credit score more heavily.
“A higher credit score doesn’t just get you a better rate; it can also unlock a meaningfully bigger line of credit at the same equity level,” Lokenauth continues.
...in as little as 3 minutes – no credit impact
How your DTI affects how much you can draw
Additionally, your debt-to-income ratio (DTI) plays a part in this equation, as the lower your DTI, the more money you’ll be able to draw from your line of credit.
“Even with plenty of equity, a high DTI can shrink or kill your odds of qualifying for a HELOC, because the lender is asking whether you can actually afford another monthly payment – not just whether the equity exists,” Katz notes.
To calculate your DTI, take your total monthly debt payments and divide by your gross monthly income. Most lenders prefer a DTI ratio of no higher than 43% to 50%.
“I’ve seen homeowners with $300,000 in equity get capped at a tiny fraction of that because their existing debts left almost no room,” says Lokenauth. “Equity opens the door, but DTI decides how far it swings open.”
What else affects your HELOC limit beyond equity?
Several other factors beyond equity, CLTV, credit score, and DTI move the needle. One of them is the home appraisal, which is required by your lender before a HELOC will be green-lit. If your property has decreased significantly in value since you purchased it, your HELOC limit will be lower.
“Keep in mind that your lender will use its own appraised value, not your optimistic guess,” says Katz. “And whether your home is your primary residence, a second home, or a rental property matters, too, because lenders give their best terms on the place you actually live in.”
Additionally, state laws play a role, as a few states have their own rules that restrict home equity borrowing more tightly than elsewhere. In Texas, for example, specific homestead lending laws cap total home debt differently than most other states.
“Add in income documentation, employment history, and existing liens, and you can see why two identical homes on paper can get very different HELOC offers,” Lokenauth points out.
FAQs about HELOC sizes
My home is worth $500,000, and I still owe $250,000 on my mortgage. What's the most I can borrow with a HELOC?
The exact loan limit allowed will depend on the maximum combined loan-to-value (CLTV) ratio the lender will allow. Many lenders cap CLTV at 80% or 85%, which means you may be able to borrow between $150,000 to $175,000, assuming you meet the loan’s other qualifications. If your lender permits up to a 90% CLTV (which Better allows), your maximum draw is $200,000.
I have $250k in equity, but my credit score is only 660. Will that reduce how much HELOC I can get?
It’s possible that your HELOC could be approved with a 660 credit score. However, a lender may lower the maximum CLTV allowed. For example, CLTV may fall between 70% to 75% in this scenario, versus up to 85% to 90%.
Is it better to take out a HELOC for the full limit or just what I need?
It’s generally better to only take out what you need, at least initially. That way, you leave yourself room to borrow more as circumstances change. Note that a HELOC is a variable-rate loan secured by your home; drawing the full limit just because it’s available could make you house poor if rates go higher.
My lender says I can only get 80% CLTV, but I heard some lenders go up to 90%. Does that make a big dollar difference on my HELOC?
Yes, it can make a major difference. On a home valued at $500,000, if you have a $250,000 mortgage loan balance, the gap between what you can borrow with 80% CLTV and 90% CLTV is $50,000. On higher-value homes, this gap grows even larger.
How does the appraisal affect how much HELOC I qualify for? My Zillow estimate is way higher than what I paid.
Zillow’s Zestimate is an algorithmic guess, not a legal valuation, and lenders will not use it. Your HELOC math depends entirely on the licensed appraiser’s valuation number, which can land well below or above when an online tool tells you.
Is a HELOC or cash-out refinance a smarter way to access $200k of my home equity?
A cash-out refinance locks in a fixed rate but also resets your entire mortgage. A HELOC gives you access to funds on a variable rate for only what you need – in this example, $200,000 – leaving your first mortgage undisturbed, which is especially appealing to homeowners who have low rates on their first mortgage. But if your current rate is already high or you want one predictable fixed payment, cash-out refinancing could make more sense.
What are my best financing options if I don’t qualify for a HELOC?
Alternative financing choices include a home equity loan, personal loan, or cash-out refinance. Compare rates and terms carefully before making a decision.
The bottom line about HELOC sizes
Accruing a quarter-million dollars in equity can open the gate to borrowing money via a HELOC, but your financial health will determine how wide that gate swings open.
The maximum amount you’ll be allowed to borrow is based on how much you still owe on your mortgage, how your lender calculates CLTV, and whether your credit score and DTI demonstrate that you can swing another monthly payment.
If maximizing available borrowing is important, compare lenders' maximum CLTV limits, underwriting requirements, fees, and interest rates. Qualified borrowers may be eligible for up to 90% CLTV with Better.
...in as little as 3 minutes – no credit impact