If you've paid down your mortgage or your home has gained value, you may have equity you can borrow against. But the amount a lender is willing to lend is usually less than your total equity. Here's how lenders typically think about it.
Start with your equity
Your equity is your home's current market value minus everything you owe on loans secured by it — your first mortgage plus any existing home equity loan or line of credit. Lenders generally rely on an appraisal or valuation to estimate the market value, so the number they use may differ from an online estimate.
Combined loan-to-value (CLTV)
Most lenders limit borrowing with a ratio called combined loan-to-value, or CLTV. It compares the total of all loans on the home — including the new one you're asking for — with the home's appraised value. Each lender sets its own maximum CLTV, and that cap is usually below the full value of the home. In practice, the room you have to borrow is roughly the lender's maximum share of your home's value, minus what you already owe.
Because the cap differs by lender, product and property type, two lenders can look at the same home and arrive at different amounts.
Other factors that shape the amount
- Credit history: your score and payment history can affect both eligibility and terms. Our guide on how credit scores affect the offers you see explains why.
- Income and debt-to-income ratio: lenders want to see that you can afford the new payment alongside your existing debts.
- Property type and occupancy: a primary residence is often treated differently from a second home or rental.
- Loan type: a lump-sum home equity loan and a revolving HELOC can come with different limits. See home equity loan vs. HELOC for how they differ.
Your home is the collateral
Borrowing against your home means the home secures the debt. If you can't keep up with the payments, you could lose your home to foreclosure. Borrowing less than the maximum you're offered can leave a cushion if home values fall or your income changes, and it can make the payment easier to manage.
Before you apply
Have a rough idea of your home's value and your current loan balances, decide how much you actually need and what it's for, and compare APR, fees, closing costs and repayment terms rather than the maximum amount alone.
Lendara is a marketplace, not a lender. Lendara receives compensation from partners, which may impact which offers appear and their order; we don't include all offers available. Participating lenders set their own limits, rates, fees and terms, which vary by applicant and aren't guaranteed. When you're ready, you can explore home equity loan and HELOC options from participating lenders.
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