Do you qualify for a HELOC?
A lender checks four things before it opens a line.
- Equity: you usually need to keep 15–20% of your home's value after the loan.
- Credit score: often 680 or higher for good terms, sometimes lower with more equity.
- Debt-to-income: often 43% or below.
- Income and history: steady, documented pay and a solid record of on-time payments.
- The catch: strong equity won't save an application with weak credit or high debt.
The typical bars to clear
A HELOC is a line of credit backed by your home. Because your home is on the line, the lender checks four numbers before it opens one. Here are the ones that come up most.
The four things a lender checks
- Equity and combined loan-to-value. CLTV is all loans on the home divided by its value. Lenders usually cap it around 80–85%. So on a $400,000 home, all your mortgage debt plus the new line stays under about $340,000, and you keep 15–20% equity.
- Credit score. A score of 680 or higher often wins good terms. You can sometimes qualify below that if you hold more equity, but the rate tends to run higher.
- Debt-to-income ratio. This is your monthly debt payments divided by your monthly income. Lenders often want it at 43% or below, so your existing bills leave room for the new payment.
- Income and history. The lender wants steady, documented income and a solid record of paying on time. Recent late payments weigh against you.
How to improve your odds
If a number is close, you have levers. Pay down other debt to lower your DTI. Build your credit score over a few months. Or wait for more equity as you pay the mortgage down and the home's value rises. Any one of these can move a borderline file into range.
Equity alone doesn't get you the line. Even with plenty of it, weak credit or a high debt-to-income ratio can sink the application.
Fix those first. If you apply before you're ready, the lender's hard credit pull dings your score for nothing. Read who a HELOC is for and how to build your credit before you file.