How Much Home Equity Can I Borrow? Formula + Examples (2026)

The lending formula (CLTV)

1. 1

   Estimate current market value from recent comparable sales.

2. 2

   Multiply by the lender’s cap — commonly 0.80 or 0.85.

3. 3

   Subtract your mortgage balance and any other liens.

4. 4

   The result is your estimated maximum draw or loan amount.

What else lenders check

• Credit score: 640–700+ for competitive pricing on a second lien.
• DTI: commonly capped at 43% including the new payment.
• Income documentation: pay stubs, W-2s, or two years of returns if self-employed.
• Valuation and payment history: appraisal or AVM, plus a clean record on your first mortgage.

Payment reality check

• $75,000 at 7.5% over 15 years ≈ $695 a month.
• $100,000 at 8% over 30 years ≈ $734 a month.
• Add closing costs of roughly 2–5% of the loan.
• A variable-rate HELOC payment can rise — budget for two points higher than today.

Ways to increase your borrowing power

• Raise the appraised value: document renovations and provide strong comparable sales.
• Lower the mortgage balance: extra principal payments directly increase available equity.
• Find a lender with a higher cap: some go to 90% CLTV for strong credit, usually at a higher rate.
• Consider a cash-out refinance instead if replacing the first mortgage is cheaper than adding a second lien.

Your five-step plan

1. 1

   Estimate value and pull your exact mortgage payoff balance.

2. 2

   Run the home equity loan calculator for available equity and payment.

3. 3

   Check your credit score and fix quick errors.

4. 4

   Get written quotes from your servicer plus two competitors in the same week.

5. 5

   Proceed only if the funds raise net worth or replace higher-rate debt.