You can borrow up to 65% of your home’s value. However, your mortgage balance plus your HELOC limit can’t exceed 80% of your home’s value.
Here’s an example:
The value of your home = $750,000
Your outstanding mortgage balance = $425,000
The maximum allowable total home debt would be calculated as:
$750,000 x 80% loan-to-value ratio = $600,000
Then, you have to subtract the outstanding balance on your mortgage to get the total allowable HELOC amount:
$600,000 – $425,000 = $175,000
Now, you still need to make sure that $175,000 doesn’t exceed 65% of your home’s value. To be sure, simply divide the HELOC amount by the value of your home:
$175,000 / $750,000 = 23%
In this example, you can access $175,000 through a HELOC, which equals 23% of your home’s value.