How Much HELOC do You Qualify For?

Home Equity Credit Line Qualifier

This tool estimates how large of a credit line against your home equity you may qualify for, for up to four lender Loan-to-Value (LTV) ratios. Lenders typically loan up to 80% LTV, though lenders vary how much they are willing to loan based on broader market conditions, the credit score of the borrower, and their existing relationship with a customer.

See Current Fairfield Rates

For your convenience we publish current HELOC & home equity loan rates and Fairfield mortgage refinance rates below to help you estimate your payments and find a local lender.

House and Current Mortgage Debt Info Amount
Appraised property value ($):
Owed on first mortgage on property ($):
Owed on second mortgage on property ($):
Loan-to-value Ratios Percent
LTV ratio 1 (%):
LTV ratio 2 (%):
LTV ratio 3 (%):
LTV ratio 4 (%):
Scenario 1 2 3 4
% of Appraised Value:
Maximum Debt:
Less Existing Loans:
Your Credit Limit:

Current Fairfield Mortgage Rates

The following table shows current Fairfield 30-year mortgage rates. You can use the menus to select other loan durations, alter the loan amount, change your down payment, or change your location. More features are available in the advanced drop down.

Fairfield Homeowners: Leverage Your Home Equity Today

Our rate table lists current home equity offers in your area, which you can use to find a local lender or compare against other loan options. From the [loan type] select box you can choose between HELOCs and home equity loans of a 5, 10, 15, 20 or 30 year duration.

How Much Do You Qualify For?

What is your creditworthiness?

Based on your current financial situation, what kind of loans and mortgages will you be approved for?

Even if you pay your bills on time religiously and you have an enviable credit score, you may not be able to borrow as much money as you want.

The easiest way for a homeowner to obtain a large loan is a home equity line of credit (HELOC). It's a type of open-ended loan, in which your home serves as the collateral.

With a HELOC, you will be approved for a certain amount based on your current rating, the amount of equity in your home, and the percentage of your home's appraised value (LTV ratio) that the lender is offering to lend you. Lenders will set the ceiling on your HELOC by taking the LTV ratio and subtracting what you still owe on your mortgage.

Your home is probably the most valuable possession you own, and a HELOC could put it into jeopardy, so you should only use a HELOC for major expenses, such as home improvement, education, and medical emergencies. HELOCs are not your personal piggy bank.

Vector illustration of two construction workers repairing a roof.

Your HELOC Limit Simplified

First, let's see how the calculator works.

For a simple check of how much credit you have stashed away in your home, let's put the current appraised value of your home at $650,000, and we’ll say that you still owe $225,000 on your mortgage. The loan-to-value ratio is determined by your lender, and it's one of the most important factors in determining the amount of additional money you can borrow against your home.

The LTV ratio, expressed as a percentage, varies from lender to lender, but 75% is about average. Furthermore, the higher the lender's LTV limit, the more credit you will qualify for, though larger lines are typically at higher interest rates.

Entering this information into the appropriate fields of the calculator yields some interesting results. When we use the national average of a 75% LTV, this translates into a $262,500 line of credit. But if you were to find a lender offering an 85% LTV, you would be able to borrow $327,500 on that same HELOC.

Why Get a HELOC?

Whether you’re taking a three-month cruise, financing your son’s education, buying a ridiculously large TV, or paying off some nagging credit card debt, you can get a HELOC or home equity loan for whatever you want. But the wisest way to spend the money is on home improvements that can increase the value of the home serving as your collateral. Then you're more likely to qualify for a loan if you're forced to refinance. If you use the home equity money to upgrade your property, you're doing the right thing.

However, be forewarned if you're planning to get a line of credit based on your principal residence merely as a safety net. If you have no plans to withdraw a specific amount of money, make sure your lender is made aware. Many of them set minimum withdrawal amounts to make it worth their while.

HELOCs vs. Home Equity Loans vs. Cash Out Refinancing

Cash-out Refinance

A cash-out refinance, is really a refinancing of your existing mortgage with an additional lump sum added in, to be spent as you see fit. This can be viewed most simply as one loan replacing another.

Home Equity Loan

A home equity loan, is a lump sum payment as well, but it does not include your mortgage payment – it is in addition to your mortgage, so is sometimes referred to as a second mortgage. The first mortgage has a senior position in the capital structure, but if you default on either loan you could still lose the house.

Home Equity Line of Credit

A HELOC is similar to a home equity loan in terms of working alongside your existing first mortgage, but it acts more like a credit card, with a draw period, and a repayment period and is one of the more popular options with today’s homeowners.

Each option can be strategic, depending on your own circumstances – so understanding more about why you’d choose one over the other can help you to focus your research.

Loan Type Home Equity Loans HELOC Cash Out Refi
Interest Rate Fixed Adjustable (in most cases) Fixed
Draw Money Lump Sum As needed, throughout draw period Lump Sum
Tax Deductible Interest No No Yes
Interest Only Payment No Yes No
Interest On Loan Amount Amount Drawn Loan Amount

As the Federal Reserve has lifted short-term interest rates in the late 2010s many homeowners who typically opted for the cash-out refi option in the prior decade became more inclined to use a home equity loan or line, so they keep their existing low rate on the majority of their home debt. Then as the COVID-19 crisis struck interest rates crashed to the floor, shifting homeowner preference back toward cash out refinancing.

While a home equity loan is a lump sum loan you obtain using your home as collateral, a HELOC is more like a credit card account with a predetermined maximum that you have access to over a period of time called the "draw period."

A home equity loan is often referred to as a second mortgage because if your house goes into foreclosure, the primary mortgage lender is first in line to get paid from the proceeds of your home’s sale - the secondary lender gets whatever is left. As a result, the home equity lender must charge higher interest rates than the primary lender. If it's any consolation, those increased interest rates are still considerably lower than your credit card.

The two differ when it comes to interest rates. The interest rate on a HELOC is most often variable, and it is closely tied to the prime rate (as reported in the Wall Street Journal).

Loan Freezes/Reductions

Lenders have an "out" when the value of your home drops significantly, or when a fundamental change in your financial situation leads your lender to doubt your ability to keep up with the payments (for example, you lose your job or your breadwinning spouse).

If this happens, you have two options. You can either try and work things out with your lender, perhaps providing documentation showing that your home has retained its value, or you can shop around for another lender. Remember that this will incur duplicate charges because you'll have to repay many of the application and appraisal fees.

Changes to Mortgage Debt Tax Benefits

The 2017 Tax Cuts and Jobs Act (TCJA) had a significant impact on the tax deductions associated with mortgage debt. Interest on mortgage debt is tax deductable up to a limit of $750,000 in debt. Any interest beyond that is not deductable. Interest on home equity loans and HELOCs is no longer tax deductible unless it is obtained to build or substantially improve the homeowner's dwelling.

Is Home Equity Credit Right For You?

If you're in the market for credit, a home equity plan is just one of the many options you should explore. Make sure to weigh the costs of a HELOC against its benefits. Without putting your assets in jeopardy, shop around until you find the terms that suit your situation.

If you decide to apply for a HELOC, read the agreement carefully and pay special attention to the terms, annual percentage rate (APR), and the cost of setting up the plan.

Learn The Lingo

It's best to familiarize yourself with the terminology of home equity credit lines before you use our calculator and start shopping for a lender. Here are the basics:

  • Appraised value of property is the current market value of your house. If your house has not been appraised, you can research what similar homes are selling for in your area, which will give you an estimate of the appraised value of your home.
  • Total of mortgages owed against property is the sum total of all mortgages (and any liens) against your property.
  • Line of credit interest rate is the interest rate you can expect on a line of credit, entered as a percentage. Our calculator will base your minimum payment on the LTV ratio you enter.
  • Loan-to-value ratio is the highest percentage of your home's value that the lender will lend you. If your home is worth $250,000 and your lender's LTV ratio is 80%, you would be allowed to borrow $200,000 ($250,000 x .80) MINUS any mortgages or liens already in place. If you still owe $150,000 on your mortgage, the highest amount you could qualify for is $50,000 ($200,000 - $150,000).
  • Max loan is the maximum loan amount for each LTV ratio.
  • Less loans row is the row of results that lists the total of all loans and liens against the property. It remains constant for all LTV ratios.
  • Credit limit shows the limit for each LTV ratio that was entered.
  • Interest rate shows the total of 10 years of interest-only payments for each LTV.

Fairfield Home Buyers May Qualify For Low Downpayment Home Loan Options

Explore conventional mortgages, FHA loans, USDA loans, and VA loans to find out which option is right for you.

Find Out What Loan You Qualify For & Get Pre-Approved Today

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