HELOC capacity
Borrowing capacity · Available equityHELOC capacity is the amount a homeowner could still borrow against a property through a home equity line of credit. Lenders cap the total debt secured by a home at a share of its value, the combined loan-to-value (CLTV) limit.
What is HELOC capacity?
A HELOC is a revolving loan secured by a home. A lender sizing one adds up every loan secured by the property, the mortgage and any existing line, and compares the total with the home's value. That ratio is the combined loan-to-value.
Capacity is what is left under the lender's limit: the home's value times the limit, minus the debt already secured against it. When the debt is already over the limit, the capacity is $0.
It is smaller than home equity. Equity is the whole gap between the value and the debt. Capacity is the part of that gap a lender would lend against.
How HELOC capacity works, with numbers
A home is worth $600,000, and the limit is 85%, so the property supports $510,000 of secured debt. It carries a $380,000 mortgage and $20,000 already drawn on a HELOC.
The capacity is $110,000. The same home has $200,000 of equity; the $90,000 between the two figures is the 15% of the value that stays out of reach.
- Value × 85%
- $510,000
- Mortgage balance
- − $380,000
- Existing HELOC
- − $20,000
- Available
- $110,000
Why HELOC capacity matters
Capacity moves with three numbers: the home's value, the mortgage balance as it is paid down, and the balance on any line already open. A change in any of them changes the figure.
A lender's own number can differ. It rests on the lender's appraisal, its CLTV limit, and the borrower's credit and income. A capacity figure worked from the borrower's own records is an estimate, not an approval.
HELOC capacity in Taiga Finance
Taiga Finance shows no HELOC capacity figure: the real number rests on a lender's appraisal, limit and underwriting. A property's page shows the inputs, its value and each loan linked to it, a mortgage and a HELOC alike, with the equity between them and the “Equity share” of the home's value.
Tracking a HELOC, in the help center →Key takeaways: HELOC capacity
- HELOC capacity is the home's value times a CLTV limit, minus the debt already secured by the home.
- The lender sets the CLTV limit.
- Capacity is smaller than home equity, because the slice above the limit can't be borrowed.
- It is an estimate. A lender's appraisal, limit and underwriting decide the real number.
Questions about HELOC capacity
How is HELOC capacity calculated?
Multiply the home's value by the lender's combined loan-to-value limit, then subtract the mortgage balance and any existing HELOC balance. At 85%, a $600,000 home with $400,000 of secured debt has $110,000 of capacity.
Is HELOC capacity the same as home equity?
No. Home equity is the value minus all the debt secured by the home. Capacity is only the part of that equity under the lender's CLTV limit.
How much home equity can be borrowed against?
The part under the lender's combined loan-to-value limit, after the mortgage and any existing line are subtracted, subject to the lender's appraisal and underwriting.
Does Taiga Finance show HELOC capacity?
No. A property's page shows its value, each loan linked to it and the equity between them; the capacity itself depends on a lender's limit and appraisal.