How Much Can You Borrow With a Home Equity Loan?

Find your maximum home equity loan amount

Couple carrying boxes into their new home
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A home equity loan is a type of financing option that allows you to borrow money based on how much of your home's value you own. You can use the loan proceeds for repairs, renovations, and more, but you're limited as to how much you can borrow.

Start by reviewing how much equity you have in your home if you’re thinking about taking out this type of loan. Then shop around to get the best interest rate and repayment terms for your needs. You can get a home equity loan from a variety of banks, credit unions, or lenders, but each may have its own maximum amount for how much you can borrow.

Key Takeaways

  • A home equity loan is a type of second mortgage that lets you borrow money based on how much equity you have in your home.
  • Home equity is the difference between what you owe on your mortgage and what your home could sell for on the current market.
  • The maximum amount you can borrow with a home equity loan depends on how much equity you have in your property. You can usually borrow as much as 80% or 85% of your equity depending on a few factors.
  • You can use home equity loan proceeds for home repairs, college costs, emergencies, and more.

How Do Home Equity Loans Work?

A home equity loan is based on the amount of equity you have in your property. You’ll get a lump sum of money, so it may be wise to know how much you want to borrow before you apply for the loan. Home equity loans tend to come with fixed interest rates so the rate won’t change for the life of the loan.

A home equity loan can be used for just about anything, but this type of loan is often used to help pay for repairs, home renovations, or upgrades. You can also use the money for personal reasons, like a wedding, vacation, or college education, and even for debt consolidation.

Note

A home equity loan is a type of second mortgage. Your home is used as collateral to secure the loan. Your lender can foreclose on your property if you fall behind on paying the loan back.

Home Equity Loan Maximums

You can usually borrow up to 85% of the equity you have in your home, but the actual amount that you can borrow depends on your credit history, your income, and your home’s market value.

Your loan-to-value (LTV) ratio is the key factor here. It's the value of your mortgage compared to the market value of your home. The higher your LTV, the greater of a risk you are to lenders. This could hurt your chances of qualifying for a home equity loan or cause you to get a higher interest rate.

Note

Calculate your LTV by dividing your mortgage’s principal balance by your home’s market value. For example, your LTV would be about 67% if you have a mortgage balance of $200,000 on a home worth $300,000. Lenders will likely require that you have an LTV below 80% or 85% before you apply.

Let’s say you own a home with a value of $330,000. You have $220,000 left to pay on your 30-year mortgage, so you have $110,000 worth of equity in your home. The most a lender might offer you on a home equity loan in this case is $93,500, or 85% of your $110,000 home equity. But that still depends on your credit history and income. The lender may only approve you for a $60,000 home equity loan if your credit score isn’t the highest and other factors are against you.

Now let’s say that your home is worth only $300,000 and you have $220,000 left on your mortgage. This means you have $80,000 in home equity. Your lender may approve you for a loan worth a full 85% of your home equity, $68,000, if you have an excellent credit score and your finances are in order. It all depends on your financial situation and the lender.

Note

Use a home equity loan calculator before you apply to give you an idea of roughly how much you can expect to borrow.

Other Home Equity Loan Requirements

You'll want to check on a few other things before applying for a home equity loan.

Your Credit Score

The higher your credit score, the more likely you are to qualify for the lowest interest rate available on a loan. A low credit score may hurt your chance of qualifying, or it could mean a higher interest rate and a lower loan amount if you do qualify.

Note

Good or excellent credit is a FICO score of 670 or higher. Having a score this high may make it easier to qualify for a home equity loan. But all lenders have their own requirements for eligibility, so review your credit report to make sure errors are removed and that it’s in good shape before you apply. You're entitled to a free credit report each year.

The Loan Amount

Some lenders may have a minimum amount you must borrow. U.S. Bank had a minimum home equity loan amount of $15,000 in July 2022.

Other lenders might state a maximum loan amount in addition to the 80% or 85% cap. NIH Federal Credit Union has a maximum home equity loan amount of $250,000.

Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is your monthly gross income compared to your monthly debt payments. This may also influence your eligibility for a home equity loan. Lenders want to be sure that you can pay back the loan, even in the case of an emergency such as a job loss. The lower your DTI, the more likely you are to qualify for a home equity loan.

Note

Home equity loans are backed by the collateral of your home, but there are several factors that can influence how much you can borrow and who will lend to you. Compare as many lenders as possible before applying for a home equity loan.

Home Equity Loan vs. Home Equity Line of Credit (HELOC)

Both home equity loans and home equity lines of credit (HELOC) offer borrowing options, but they aren’t quite the same.

Both have credit score requirements and each has its own purpose. A HELOC might be best for your circumstances if you have ongoing home repairs or renovations. A home equity loan might be right for you if you’re planning a major remodel and you know exactly how much the project will cost,

Home Equity Loan Home Equity Line of Credit (HELOC)
One lump-sum amount of money A line of credit
Fixed interest rate Variable interest rate
Fixed monthly payments for the life of the loan Minimum monthly payments during the draw period; potentially higher monthly payments during the repayment period
Loan term is set from the beginning (months or years) Borrow period is typically about 10 years, and the repayment period is usually 10 or 20 years
May qualify for a tax deduction on interest if used for home improvements May qualify for a tax deduction on interest if used for home improvements

The Bottom Line

You may be able to apply for a home equity loan if you have enough equity in your property, usually 20% or more. You can usually borrow up to 85% of your home equity, although some lenders may have lower limits.

A home equity loan can help you fund specific home renovations, repairs, or remodels, or you can use the funds to pay for other needs, such as a wedding, college education, or medical bills. Just remember that a lien will most likely be placed on your home and the lender could foreclose if you fall behind on payments. Make sure you can comfortably make the payments on your new loan before you complete an application.

Frequently Asked Questions (FAQs)

Is there a minimum amount for a home equity loan?

Each lender has its own requirements and terms for home equity loans, so the minimum loan amount can vary. Vet each lender before applying to make sure it will meet your needs. You may also be required to have a minimum amount of equity in your home.

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

It can take a few weeks to process a loan request. An underwriter had to verify and review all your financial documents when you applied for your mortgage, and a similar process is necessary for a home equity loan. You may also have to wait three days for the funds to become available.

Where can you get a home equity loan?

You can get a home equity loan through a bank, a credit union, or an online lender. It’s a good idea to check out many different offers and lenders and compare them. Find out which lender offers the lowest interest rates, the fewest fees, and the best repayment terms. Make sure you’re eligible before applying and try to find a reliable cosigner to help you qualify if you aren't eligible on your own.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Credit Union Administration. "Home Equity Loans & Lines of Credit."

  2. MyFICO. "What Is a FICO Score?"

  3. U.S. Bank. "Home Equity Rate and Payment Calculator."

  4. NIH Federal Credit Union. "Discover the Equity Locked in Your Home."

  5. Internal Revenue Service. "Publication 936, Home Mortgage Interest Deduction (2021)," Page 2.

  6. U.S. Bank. "Home Equity FAQs."

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