One major benefit of owning a home is being able to borrow against the equity you’ve built in it. And you may be thinking of taking out a home equity line of credit, or HELOC, this year to capitalize on that option.
The Federal Reserve’s trio of interest rate cuts in late 2025 has generally made HELOC borrowing more affordable in 2026, so it may be a good time to apply. Plus, HELOCs give borrowers a lot of flexibility.
As John Dustman, senior vice president and head of consumer lending at Axos Bank, explains, “Once the HELOC is opened, you can draw funds against the available credit limit to cover various expenses. Think of it like a credit card. The credit is available for use, but interest charges and monthly payments are only due when there’s an outstanding balance.”
Best of all, HELOCs can be used for many different purposes, says Dustman. These include home improvements, college tuition or emergency cash reserves.
If you’re looking to take out a HELOC in 2026, it’s important to know how much you can borrow. Here are the factors that could help determine your HELOC limit.
[READ: Best HELOC Lenders]
Home Value and Equity
One of the biggest factors that goes into your HELOC calculation is your home’s value and the amount of equity you have in it.
John Donikian, vice president at Best Interest Financial, says, “Most lenders allow customers to borrow as much as 85% of their home’s value.”
Lenders commonly use a metric called combined loan-to-value ratio, or CLTV, when determining how much homeowners can borrow with a HELOC. If you have a home worth $500,000, a maximum 85% CLTV means the total amount of your first mortgage and HELOC cannot exceed $425,000, says Donikian. So if your mortgage balance is $200,000, your HELOC would likely max out at $225,000.
Dustman says CLTV limits can vary by lender. Some, he says, might use a 90% CLTV formula, while “others may have a more conservative threshold at 80% or lower.” Those rules could ultimately make a big difference in the amount you’re able to borrow. As Dustman explains, if you have a home worth $500,000 and an outstanding mortgage balance of $200,000, if the lender allows for an 80% CLTV, you could be eligible for a $200,000 HELOC. If the lender allows for a 90% CLTV, your HELOC could be $250,000.
As for determining home value, the process depends on the lender.
“An appraisal is still required by many lenders, notably for higher balances or tighter credit profiles,” Donikian says. “Yet some loans of smaller HELOC amounts or lower CLTVs now are closed with automated valuation models or hybrid appraisals. The approach will vary depending on the size of the loan, market conditions and the lender’s appetite for risk.”
Jordan Del Palacio, home loan specialist at Churchill Mortgage, says, “With many lenders, $250,000 is typically the threshold where you also have to pay for a proper appraisal to confirm the value, versus being able to accept the figure from an automated valuation model.”
[SEE: Best Home Equity Loans]
Your Lender’s Cap and Rules
The amount of equity you have in your home helps determine how much you can borrow with a HELOC. But even if your lender’s CLTV formula allows for a certain number, you may run into snags with their specific HELOC limit, says Donikian.
“Depending on the lender, there may be caps in place that limit how much you can borrow, usually in times of market volatility,” he explains.
Donikian also says that while you may technically be able to take out more than one HELOC at a time, it’s pretty rare.
“Combined, all the liens still can’t exceed the lender’s maximum CLTV,” he explains. “And most lenders won’t want to allow a second HELOC behind another one anyway because of competing lien positions.”
Your Credit Score
You might think that as long as you have enough equity in your home, you’ll be able to qualify for a HELOC. But not so fast. Your credit score also plays a role in whether you’re eligible for a HELOC, Donikian warns.
Each HELOC lender sets its own minimum credit score requirements. But Donikian says, “Most lenders prefer a credit score between 620 and 640.” He also says the best terms and loan amounts are usually made available to borrowers with credit scores of 680 or above. Keep in mind, though, that number can vary by lender.
Del Palacio says the minimum credit score needed to qualify for a HELOC might also hinge on the sum you’re borrowing, with lenders imposing stricter limits for higher lines of credit.
[READ: You Can Buy or Refi With a First-Lien HELOC — But Should You?]
What You Can Afford to Repay
You may qualify for a certain HELOC amount based on your home equity and credit score, coupled with your lender’s limits. But that doesn’t necessarily represent the amount you should borrow.
It’s important to crunch your own numbers to see what HELOC payment you can fit into your budget before putting that line of credit in place and tapping it. It’s also a good idea to set limits on what you borrow based on your reason for taking out a HELOC in the first place.
“When calculating affordability with clients, I always start with their goals and work backwards,” Del Palacio says. “If (the borrower) is doing remodeling or repairs, I will review the client’s credit, income and assets, then detail what the payment will look like to confirm that is how they want to pay for the work. If they’re opening a HELOC for debt consolidation, I compare the payment of the new line of credit with their current monthly debts to see if it saves them money.”
Donikian says it’s important to limit the amount you borrow to an amount you feel confident you can handle. That’s because falling behind could have consequences, such as credit score damage. And in an extreme scenario, you could end up putting your home at risk of foreclosure.
“Ultimately, HELOC approval isn’t so much about what you can borrow mathematically as it is about what comfortably fits in the context of the borrower’s overall financial profile,” he insists.
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Here’s How Much You Can Borrow With a HELOC in 2026 originally appeared on usnews.com
