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How Much HELOC Can I Get? How to Qualify for a HELOC?
What you'll learn: How a HELOC works, how much equity you need to qualify, and HELOC LTV limits
EXPECTED READ TIME: 4 MINUTES
Updated February 8, 2023
Thinking of a home equity line of credit (HELOC) to fund home improvement projects or other needs? Read on to learn how much equity you need for a HELOC, the HELOC maximum amount, and how much loan you may qualify for.
How does a HELOC work?
A HELOC is a line of credit that you draw from as needed. It’s similar to a credit card, where you have a credit limit – except it’s secured by the equity you have in your home.
Another important difference between a HELOC and a typical revolving credit line is that a HELOC has two periods:
- Draw Period – During the draw period, you can access funds and make interest-only payments. This commonly lasts 10 years.
- Repayment Period – In the repayment period, you make regular monthly payments with principal and interest. You can no longer borrow during this time.
Why use a HELOC and not other forms of credit? Many homeowners prefer to finance things like home improvements with a HELOC because they usually offer lower interest rates and the flexibility of a draw period. HELOC rates are usually variable and often more favorable than unsecured loans like most credit cards. Just like other types of home loans, rates can depend on how much equity you have, your credit score, and whether you live in the property.
How much equity do I need for a HELOC?
Every lender has their own HELOC guidelines. Many require borrowers to have at least 20% equity (although some will go as low as 15%) and a loan-to-value ratio (LTV) of 80% – that’s the max HELOC LTV at PenFed.
How much HELOC can I qualify for?
Your HELOC loan amount will depend on many factors. Your income, credit score, property type, and whether or not you live in the home make a difference in eligibility and loan size. It helps to have a favorable debt-to-income ratio (DTI). The max DTI for a HELOC varies by lender, but is typically between 43% and 50%. How much equity you have in your home is another important variable.
If you meet the qualifications, many lenders allow you to access up to 80% of the equity in your home. But the final line of credit also takes into account your outstanding mortgage balance. Let’s see what that looks like for two theoretical scenarios.
| Borrower 1 | Borrower 2 |
Current Home Value | $650,000 | $700,000 |
Mortgage Balance | $487,500 | $532,000 |
LTV Ratio | 75% | 76% |
Credit Score | 740 | 620 |
DTI Ratio | 43% | 45% |
Property Type | Primary Residence | Investment |
May Qualify For | $32,500 | $28,000 |
In this example, both borrowers were within the HELOC DTI and LTV limits and qualified for a credit line. Keep in mind their credit scores and property types could have affected the loan limits and interest rates. You can run a simple estimate using a HELOC qualification calculator.
What is the maximum HELOC amount?
Every lender has their minimum and maximum loan amount. As of December 2022, for PenFed, the minimum HELOC amount is $25,000. The max HELOC loan amount is $500,000.
Can I increase my home equity line of credit?
When you receive your HELOC, you will have a set credit limit for the life of that line credit. If you need additional funds over your HELOC limit, you'll have to apply for another loan. That's why you may want to consider taking out the maximum amount you might need over the next several years. You only draw the money you need and you're only charged interest on the funds you take out.
How many HELOCs can you have?
Can you apply for multiple HELOCs? As long as you qualify, you can have multiple HELOCs or home equity loans. Depending on your circumstances, a cash-out refinance can sometimes be a better option.
What is the average HELOC amount?
According to Experian, the average HELOC balance in 2021 was $39,556 – a 5.7% decrease from the prior year.
How much HELOC should I get?
Many borrowers choose to accept the maximum amount they qualify for so they don’t have to worry about a HELOC increase (which would require a new loan).
If you're considering doing several remodeling projects over the next 10 years, you may want to apply for enough funds to cover all of those projects even though they may be several years out. For example, say you want to remodel your kitchen this year and add a pool next year. In that case, wait to finance the pool until next year. That way, you're only paying interest on the money you're using.
How do I get a HELOC?
To apply for a HELOC, contact your lender and complete an application. By going through the process, you'll get an idea of how much you may need to borrow. One of the advantages of this type of home equity line of credit is that it is easier and faster than a traditional mortgage.
Ready to see if you qualify? Start a HELOC application.
SIMILAR ARTICLES
What Is a HELOC? | PenFed Credit Union
Wondering what exactly a home equity line of credit is? Here's a closer look at what homeowners should know about taking out a HELOC.
What Are the Pros and Cons of a HELOC? | PenFed Credit Union
Find out what you need to know about earnest money deposits, including how much you'll need, how much to put down, and if you'll get your money back if the deal falls through.
10 Ways to Use the Equity in Your Home to Your Advantage | PenFed Credit Union
Using the equity in your home can be a smart financial move. Check out the top 10 reasons many homeowners consider a home equity loan or line of credit to reach their goals.
Top 10 Benefits of a HELOC | PenFed Credit Union
There are plenty of benefits to a home equity line of credit, or HELOC. By leveraging equity in your home, you can take advantage of the benefits.
Home Buying Steps
Mortgage Products
Disclosures
*Prime Rate is 6.750% as of December 12, 2025. The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than 6.750% for primary residences and second homes.
- Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
- Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.
Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:
For all loans with a loan amount greater than $400,000.
If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).
- Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.
Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than 6.750% for primary residences and second homes.
Property Insurance: Property insurance is required.
Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.
PenFed does not lend on:
- Mobile homes
- Co-ops or time-shares
- Properties that are currently listed on the market for sale
- Commercial property or property used for commercial purposes, even if a residence is part of the property
- Undeveloped property (land only)
- Properties with more than 4 units
Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).
- Additional limitations may apply
Home Equity Line of Credit:
- This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
- If only minimum payments are made during the draw period, the loan balance will not decrease.
- In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
- In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
- Property type of Condo has a maximum CLTV of 80%.
- The maximum CLTV available is dependent on credit qualification.
- Rates vary depending on owner occupancy and CLTV and other loan criteria.
Minimum Loan Amount Requirements in all States:
- For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.
Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.
Routing #256078446
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