Say your home is worth $900,000 and you owe $400,000 on the mortgage. The most a HELOC would usually let you borrow is $320,000. Draw $50,000 of that at 6.7% and interest alone runs $279.17 a month. Put your own numbers in above to find your limit.
Two limits, one maximum
A home equity line of credit, or HELOC, uses your home as security. At federally regulated lenders the line itself can reach 65% of the home’s value. Add the mortgage and the total can’t pass 80%. Whichever limit is lower becomes your ceiling.
The example, step by step
Sixty-five percent of $900,000 is $585,000. Eighty percent is $720,000, and once the $400,000 mortgage is taken out, $320,000 remains. The smaller figure wins. Room grows as you pay down the mortgage or as the home gains value.
How the interest works
Interest is charged only on what you’ve borrowed, and the rate floats with prime. Most lenders ask for at least interest-only payments, and that’s the payment the calculator shows for the amount you plan to use. Any principal you choose to repay sits outside it.
Good and bad uses
Renovations, a bridge before a sale and a backup fund are the usual reasons homeowners open one. Everyday spending is a poor fit, since the rate is variable and the house is the collateral. Borrowing for something that lifts your income or your home’s value is easier to defend.
Risks to know
If rates rise, your payment rises with them, and a long stretch of higher prime can strain a monthly budget that once looked easy. Miss payments and the lender can act against your home. Lenders can also cut or freeze a limit. Have a repayment plan, and don’t borrow the full amount just because it’s there.
A quick comparison
Suppose you borrow $50,000 at 6.7%. Paying only interest costs $279.17 a month. Repaying it over five years costs more each month, but you owe nothing at the end. A line of credit has no fixed schedule, so interest-only payments can leave the debt hanging around for years.
How lenders decide
Your credit score, income and home appraisal all count. Most banks also apply the stress test. The limit on offer may sit below the maximum shown here, so get a written offer from the lender before you build a project around it.
HELOC or home equity loan?
A home equity loan pays a lump sum on a fixed repayment schedule. A HELOC gives you a limit to draw on again and again. The loan fits one project with a known cost, and the HELOC fits ongoing needs. Both put your home on the line. Compare rates and fees first.
Keeping the debt in check
Repay principal too. Interest alone never shrinks the debt. Using a HELOC to clear credit cards works only if you stop using the cards, or you end up with both debts. Check your balance every few months, and lower the limit if you don’t need it.
Where to go next
Borrowing against your home has another route in a refinance, which the refinance calculator can compare. The amortization schedule shows how your current mortgage looks, and the mortgage payment calculator estimates its payment.
Frequently asked questions
How much can I borrow with a HELOC?
Up to 65% of your home's value, and no more than 80% when combined with your mortgage.
How is HELOC interest charged?
On the amount you borrow, at a variable rate tied to prime.
Do I have to pay back the principal?
Usually only interest is required, but you can repay principal at any time.
Can the lender change my limit?
Yes. Lenders can reduce or freeze a HELOC.
Is a HELOC safer than a loan?
It is riskier, because the home is the security and the rate floats.
Do these limits apply everywhere?
They apply at federally regulated lenders. Others can differ.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.