What Is a HELOC?
A home equity line of credit (HELOC) is a revolving line of credit secured by a home. The owner can borrow against their equity up to a limit during a draw period, then repay during a repayment period. HELOCs usually have variable interest rates tied to a benchmark rate.
How Much Can Be Borrowed
Lenders typically cap the combined loan-to-value ratio, often around 80%–85%. Maximum line ≈ home value × CLTV limit − existing mortgage balance.
HELOC vs. Home Equity Loan
A home equity loan gives a lump sum at a usually fixed rate; a HELOC works like a credit line with a variable rate.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Costs
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.