What is a HELOC?
Updated: February 2, 2026 • 6 min read
AUTHOR: (SizeLimitingPyMap: {bio=<div style="color: #374151; line-height: 1.75;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<div style="color: #1d1c1d;">
<p><span>Bennett Leckrone is the editorial manager and an analyst for Lower. He specializes in making complicated mortgage topics accessible for consumers. That includes both in-depth product guides and in-depth analysis on what economic moves mean for homebuyers and refinancers.</span></p>
<p><span>He was previously a business reporter with a focus on higher education and fintech at BestColleges. In that role, he reported on the development of fintech and AI curriculum, as well as the rapidly changing nature of finance education. He also wrote guides to help business students navigate AI and online education.</span></p>
<p><span>He also reported on state politics at Maryland Matters, with a focus on how policy affected people and businesses. He holds a bachelor of science in journalism degree from Ohio University.</span></p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>, hs_child_table_id=0, hs_created_at=1770043933978, hs_created_by_user_id=83124684, hs_deleted_at=0, hs_id=206641338162, hs_initial_published_at=1770044043289, hs_is_edited=false, hs_name=Bennett Leckrone, hs_path=bennett-leckrone, hs_published_at=1770998795717, hs_updated_at=1770652567617, hs_updated_by_user_id=85123122, name_first_last=Bennett Leckrone, profile_picture={url=https://19577492.fs1.hubspotusercontent-na1.net/hubfs/19577492/Bennett%20Leckrone%20Cropped%203.jpg, width=2048, height=1638, altText=Bennett Leckrone Cropped 3, fileId=207187231860, type=image}, tags=[{id=1, name=writer, label=Writer, isHubspotDefined=false, labelTranslations={}, type=option, createdAt=1770043811028, createdByUserId=83124684, updatedAt=1770043811028, updatedByUserId=83124684, order=0}, {id=2, name=reviewer, label=Reviewer, isHubspotDefined=false, labelTranslations={}, type=option, createdAt=1770043811028, createdByUserId=83124684, updatedAt=1770043811028, updatedByUserId=83124684, order=1}, {id=3, name=expert, label=Expert, isHubspotDefined=false, labelTranslations={}, type=option, createdAt=1770043811028, createdByUserId=83124684, updatedAt=1770043811028, updatedByUserId=83124684, order=2}]})
REVIEWER: (SizeLimitingPyMap: {bio=<p><span>Neel Patel is a mortgage industry professional with more than a decade of hands-on experience across loan origination, customer experience, sales operations, and strategy. He has worked at every stage of the mortgage lifecycle, from advising individual borrowers to leading teams of loan officers. </span></p>
<p><span>As an expert reviewer, Neel evaluates mortgage and personal finance content for accuracy, clarity, and real-world applicability. He specializes in ensuring information reflects how lending actually works in practice so consumers can make confident, informed decisions.</span></p>, hs_child_table_id=0, hs_created_at=1770998587713, hs_created_by_user_id=85123122, hs_deleted_at=0, hs_id=207521716567, hs_initial_published_at=1770998795717, hs_is_edited=false, hs_name=Neel Patel, hs_path=neel-patel, hs_published_at=1770998795717, hs_updated_at=1770998733653, hs_updated_by_user_id=85123122, name_first_last=Neel Patel, profile_picture={url=https://19577492.fs1.hubspotusercontent-na1.net/hubfs/19577492/Neel%20Patel%20Cropped%204.jpg, width=1638, height=2048, altText=Neel Patel, fileId=207528140173, type=image}, tags=[{id=2, name=reviewer, label=Reviewer, isHubspotDefined=false, labelTranslations={}, type=option, createdAt=1770043811028, createdByUserId=83124684, updatedAt=1770043811028, updatedByUserId=83124684, order=1}]})
Written by
Bennett Leckrone
Writer / Reviewer / Expert
Reviewed by
Neel Patel
Reviewer
Key Takeaways
- A HELOC (home equity line of credit) is a revolving line of credit backed by your home’s equity.
- HELOCs offer flexible access to cash when you need it, and often have lower rates than credit cards or personal loans since they’re secured by your loans.
- HELOCs feature a draw period where you can take out money, and a repayment period where you pay back what you owe.
See how much HELOC you can get.
A HELOC, or home equity line of credit, is a revolving line of credit that lets you borrow against your home’s equity and pay interest only on the amount you actually use.
That means you don’t have to take out a new loan every time you draw from the HELOC, making it a convenient way to tap into your home’s equity when you need it. A HELOC’s flexible access to cash and lower interest rates than other unsecured loans make it a popular loan option for borrowers looking to do home improvements or consolidate debt .
But a HELOC also comes with risks, and there are some important caveats to keep in mind.
How a HELOC Loan Works
HELOCs are lines of credit rather than one-time loans, so you can borrow on an ongoing basis.
A HELOC generally has an initial draw period, where you can borrow what you need, and a repayment period when you pay back what you owe. You’ll generally only pay interest on what you borrow, and during the draw period you might make interest-only payments.
They’re backed by your home’s equity, which generally translates to lower rates than credit cards or personal loans. That also introduces some risk, since if you don’t repay, you can risk losing your home.
How much HELOC you can actually get depends on your home’s equity. Most lenders let you borrow up to 80% loan-to-value, although some programs go higher.
Requirements for a HELOC
You’ll generally need to have built up equity in your home to qualify for a HELOC. That’s how much you owe on your mortgage compared to the total value of your home.
Your credit score, debt-to-income ratio, and other factors also play an important role in determining your HELOC eligibility.
How much equity do I need for a HELOC?
You’ll be required to have some level of home equity to get a HELOC.
How much equity you have will affect how much HELOC you can get, but it isn’t a one-to-one relationship. Your combined-loan-to-value (CLTV) ratio will also matter. That’s calculated by combining all loan amounts against the value of a property.
On a $300,000 home, for example, a $180,000 mortgage with a $20,000 home equity loan would total $200,000 for a CLTV of roughly 66%. If a CLTV cap is 80%, that means you could access about 14% of a home’s equity as a HELOC, around $42,000.
Keep in mind that CLTV caps vary significantly by your credit score and property details. You might qualify for a higher CLTV cap on your primary residence than on an investment property, for example.
The following table provides some more examples of potential HELOC amounts based on CLTV, equity, and home value.
|
Home value |
Current mortgage balance |
Equity |
Max CLTV |
Max total debt allowed |
Potential HELOC amount |
|
$300,000 |
$180,000 |
$120,000 |
80% |
$240,000 |
$60,000 |
|
$300,000 |
$180,000 |
$120,000 |
90% |
$270,000 |
$90,000 |
|
$400,000 |
$250,000 |
$150,000 |
80% |
$320,000 |
$70,000 |
|
$400,000 |
$250,000 |
$150,000 |
90% |
$360,000 |
$110,000 |
|
$500,000 |
$300,000 |
$200,000 |
85% |
$425,000 |
$125,000 |
|
$600,000 |
$350,000 |
$250,000 |
90% |
$540,000 |
$190,000 |
What credit score do I need for a HELOC?
You’ll generally need a credit score of 600 or higher to qualify for a HELOC, but exact requirements vary by lender.
Your credit score will likely affect CLTV caps: A higher credit score generally unlocks higher caps, although that isn’t universally true.
What income and debt-to-income ratio do I need for a HELOC?
Like all mortgages and equity-backed loans, the honest answer is: it depends.
Your debt-to-income ratio has an impact on your access to HELOCs, but requirements vary by lender. Your debt-to-income ratio is calculated by dividing your total monthly debts against your pre-tax earnings.
A good rule of thumb is that you’ll generally be required to have a DTI of under 50% to qualify, although circumstances vary borrower-to-borrower.
HELOC Draw and Repayment Periods
Most HELOCs have two phases: a draw period when you can borrow money, and a repayment period when you repay what you borrowed.
The Draw period
Draw periods vary for HELOCS, but they’re typically between three and 10 years. During the draw period, you can access your funds as needed and usually make interest-only payments.
Keep in mind that many lenders, including Lower, require an initial draw.
The Repayment period
Repayment periods start after the draw period ends. During the repayment period, you generally can’t borrow more and repay what you owe over a set term.
Payments during this period usually include both principal and interest, which can mean increased payments compared to the interest-only draw period.
HELOC Benefits and Risks
Getting a HELOC is a big decision. Here are some potential risks and benefits:
|
Benefit |
Risk |
|
Flexibility: HELOCs are unique compared to other mortgage-backed loans in that they’re a line of credit. You borrow what you need, when you need it. |
Using your home’s equity: Any loan backed by your home’s equity comes with the risk of foreclosure if you don’t pay it back. |
|
Lower rates: HELOCs often have a lower rate than credit card APRs, making them a useful option for consolidating debt. |
Variable interest rate: HELOCs can have a variable interest rate, although some fixed-rate options are available. That means your payments can vary over the life of the loan. |
|
Pay on interest during the draw period: Some HELOCs feature interest-only payments during the draw period. That keeps payments low during the draw period. |
Payment shock after the draw period: Because the repayment period includes both principal and interest, your payments might go markedly up if you’ve only been paying on interest during the draw period. |
Common Uses for HELOC Funds
Because HELOCs are flexible, borrowers often use them for:
- Home renovations and repairs
- Consolidating credit card debt into a lower-interest loan
- Ongoing education expenses
- An accessible emergency fund, although this might not be best if your lender requires a minimum draw.
HELOC Alternatives
A HELOC isn’t the only way to tap into your home’s equity. Two common alternatives to a HELOC are:
Home equity loans: Rather than a revolving line of credit, home equity loans offer a one-time, fixed-rate loan backed by your equity. Home equity loans are good for one-time expenses, debt consolidation, and for buyers who want predictable payments on principal and interest.
Cash-out refinances : These replace your entire mortgage with a new, larger loan and let you take a portion of your home’s equity as cash.
The Bottom Line
A HELOC is a flexible, revolving credit line secured by your home’s equity. It can be a useful tool for homeowners who need staged access to funds, but it comes with higher stakes because your home is collateral and rates are often variable.
The details of your HELOC, and how much equity you can access, will depend on your personal financial situation.
Frequently Asked Questions
What credit score and home equity do I need to qualify for a HELOC?
You’ll generally need a credit score of at least 600 to qualify for a HELOC, but exact requirements can vary. A higher credit score and more equity can improve approval chances, HELOC limits, and pricing.
How does the draw period differ from the repayment period?
A draw period is when you can borrow from a HELOC, whereas during the repayment period you generally can’t borrow more and pay back both principal and interest.
Can I convert part of my HELOC balance to a fixed rate?
Some lenders offer fixed-rate conversion options on portions of the outstanding balance.
What fees and closing costs should I expect for a HELOC?
HELOC closing costs vary by both lender and location. Those can include appraisal, origination, title/recording fees, and potential annual or inactivity fees, so comparing APR and fee schedules matters.
How do interest rate changes affect my HELOC payment?
If your HELOC has a variable rate, your interest rate (and payment) can rise or fall as benchmark rates change.