The credit limit is based on:
- Home’s Appraised Value: Current market value of your property.
- Outstanding Mortgage Balance: Existing mortgage amount.
- Lender’s Equity Requirement: Typically up to 85% of the home’s value minus the mortgage balance.
Example: If your home is valued at $300,000 and you owe $200,000 on your mortgage:
85% × $300,000 = $255,000
$255,000 − $200,000 = $55,000
Your HELOC credit limit could be up to $55,000.