Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Home Equity What LTV Is Needed for a Home Equity Loan or HELOC? Updated Sep 19, 2024 7-min read Expert Approved Expert Approved This article has been reviewed by a Certified Financial Planner™ for accuracy. Written by Jess Ullrich Written by Jess Ullrich Expertise: Banking, insurance, investing, loans Jess is a personal finance writer who's been creating online content since 2009. She specializes in banking, insurance, investing, and loans, and is a former financial editor at two popular online publications. Learn more about Jess Ullrich Reviewed by Crystal Rau, CFP® Reviewed by Crystal Rau, CFP® Expertise: Equity compensation, oil & gas investments, education planning, investment planning, student loan planning, retirement Crystal Rau, CFP®, CRPC®, AAMS®, is a certified financial planner based out of Midland, Texas. She is the founder of Beyond Balanced Financial Planning, a fee-only registered investment advisor that helps young professionals and families balance living their ideal lives and being good stewards of their finances. Learn more about Crystal Rau, CFP® Your loan-to-value (LTV) ratio is your outstanding mortgage balance divided by your home’s market value, expressed as a percentage. Lenders consider this ratio when determining if you qualify for a home equity loan or home equity line of credit (HELOC). LTV limits vary by lender, though many require at least 20% equity for a HELOC or home equity loan. Here’s why your LTV is important, a ratio that matters even more, and some insight into lender requirements. Table of Contents Skip to Section How to calculate LTVLTV limitsLTV requirements How to boost your home equityHow to apply for a HELOC or home equity loanAlternatives How to calculate LTV You can calculate your LTV using this formula: Outstanding mortgage balance / Home’s appraised value x 100 For example, if your outstanding mortgage balance is $120,000, and your home’s appraised value is $200,000, your LTV is 60%. Tip Our home equity loan calculator can help you crunch the numbers. But LTV isn’t the only ratio your lender considers when evaluating your home equity loan or HELOC application. They’ll also evaluate your combined loan-to-value (CLTV) ratio, which helps determine what you can afford to borrow. LTV only focuses on your primary mortgage balance vs. your home’s market value, while CLTV also factors in your desired loan or credit line. You can calculate your CLTV with this formula: Primary mortgage balance + desired loan/credit line / Home’s appraised value x 100 Let’s assume your primary mortgage balance is $120,000 and your home’s appraised value is $200,000, as it was in our earlier example. You’re seeking a $40,000 home equity loan or HELOC. In this case, your CLTV would be 80%. Tip You can calculate your LTV and CLTV without an appraisal using a home value estimate tool, but the results may not be accurate. Lenders may require a professional appraisal before approving you for a home equity loan. Home equity loan or HELOC LTV limits Lenders often require an LTV of 85% or lower to borrow against your home, but some may accept a higher limit. Home equity loan and HELOC requirements vary by lender, but in general, it’s better to have more equity in your home if you’re planning to borrow against it. Your credit score, where you live, and whether the home is your primary or secondary residence might also factor into lenders’ LTV requirements. Below, we’ve broken down home equity LTV requirements for several lenders. If the lender discloses a CLTV requirement, we’ve noted that as well. LenderMax. LTVOur ratingFigure85%; 95% CLTV4.9/5Aven89%4.8/5Bethpage FCU85%4.7/5Hitch90% LTV/CLTV4.2/5Spring EQ90% LTV/CLTV4.1/5Navy Federal Credit Union100% (loan); 95% (HELOC); 95% CLTV3.9/5Guaranteed Rate85%; 95% CLTV3.9/5Unison70%; 85% CLTV3.8/5PenFed80%; 85% CLTV3.8/5M&T Bank85.99% LTV/CLTV3.7/5Lower95%3.7/5Prosper90% LTV/CLTV3.6/5Utah Community Credit Union90% LTV/CLTV3.6/5Citizens Bank80%3.6/5Regions Bank89% (loan); 80% (HELOC)3.5/5Third Federal80%3.5/5Connexus90%3.5/5Flagstar Bank89.99% CLTV3.4/5New American Funding80%; 85% CLTV3.4/5Alliant Credit Union85% CLTV3.3/5Randolph-Brooks FCU80%3.3/5SECU90% CLTV3.3/5PNC89.9%3.2/5AmeriSave80% LTV/CLTV3.2/5Keybank80% LTV/CLTV3.1/5 Home equity loans vs. HELOC LTV requirements As noted in our table, both LTV and CLTV limits vary by lender. However, these limits can also differ depending on whether you seek a home equity loan or a HELOC. Lenders may set different limits for each product, and HELOCs don’t necessarily have higher LTV and CLTV limits than home equity loans. These limits are just one thing to consider when deciding whether a HELOC or home equity loan is best for your situation. Other factors to think about include: HELOCHome equity loanRatesOften variableFixedTermsUp to 10 years to draw down, up to 20 years to repayUp to 30 yearsLoan typeCredit lineLump sum loanBest forIf you’re uncertain how much you’ll need to borrow and are comfortable with a variable rateIf you know how much you need to borrow and want predictable monthly payments Are high-LTV HELOCs an option? High LTV HELOCs and home equity loans, or those with a maximum limit of 90% or more, may be an option. But it’s wise to proceed with caution before borrowing. If the housing market shifts and your home’s value decreases, you could easily end up underwater, meaning the combined amount you’ve borrowed exceeds your home’s market value. This could make it difficult to profit or break even if you need to sell your home. Because a high-LTV home equity loan or HELOC presents more risk for lenders, you might also have a higher interest rate. A high interest rate means your payments will be higher as well, which could put your home at risk if your financial situation changes and your payments become unmanageable. Do any lenders offer a 90% LTV HELOC? Certain lenders offer 90% to 95% LTV HELOCs, but again, these high maximums can come with risks, such as being underwater on your home or overwhelmed by high monthly payments. Here are some lenders offering high LTV HELOCs and home equity loans: LenderProductLTV/CLTV limitNavy Federal Credit UnionHome equity loan100%Navy Federal Credit UnionHELOC95%LowerHELOC95%ProsperHome equity loan; HELOC90%Spring EQHome equity loan; HELOC90%Utah Community Credit UnionHELOC90%ConnexusHome equity loan; HELOC90% Can you get a 100% LTV HELOC? You could qualify for a 100% LTV HELOC from Navy Federal Credit Union, though an LTV limit this high is fairly rare. Still, a few other credit unions offer this option: Garden Savings Federal Credit Union Farmers Insurance Federal Credit Union Triangle Credit Union Expert take: Should you take out a high-LTV HELOC or home equity loan? Crystal Rau CFP® Because this is your home—your primary place for shelter—it makes me nervous when people over-leverage themselves to the point where they cannot cover the costs. You may be able to afford the payment on a HELOC today, however, with a variable interest rate, this payment can adjust to a point where it is no longer affordable. When taking out any debt, I always stand by 30%, meaning your total debt payments should not exceed 30% of your gross income. How to boost your home equity If you want to boost your home equity to eventually qualify for a larger HELOC or home equity loan, these strategies could help you attain your goal. Make bi-weekly mortgage payments Put extra toward your mortgage principal each month Apply any windfalls to your mortgage principal Wait for the housing market to shift before applying Repair or improve your home How to apply for a HELOC or home equity loan If you’ve decided to move forward with a HELOC or home equity loan, here’s some insight into the general process: Compare lenders and HELOC options Gather important personal and financial documentation, including W-2s, tax returns, bank statements, pay stubs, and more. Apply for a HELOC online, over the phone, or in person Provide more documents, if your lender requests them, and await approval Close on your loan, if approved Learn more about how to apply for a HELOC. What else influences my HELOC eligibility? Your lender will consider several factors beyond LTV and CLTV ratios to determine if you qualify for a HELOC. Here’s what they’ll likely review once you apply. Your credit score and reports Your debt-to-income ratio Your income and whether you’re employed The amount of equity you have in your home Typically, lenders also order an appraisal to help determine the market value of your home. The appraisal process can vary by lender, with some requiring an in-person appraisal and others doing appraisals online. Your home’s market value will help determine your total equity. Alternatives to home equity loans and HELOCs If you don’t have sufficient equity in your home or are still exploring your options, consider alternatives to home equity loans and HELOCs. Personal loans A personal loan is a fixed-rate installment loan from a bank, credit union, or online lender. You can use a personal loan for almost any purpose, including debt consolidation, home improvements, or emergencies. These loans are often unsecured, meaning you don’t risk losing your home if you don’t make payments. However, a potential downside is that average personal loan rates are often higher than home equity loan rates. Credit cards Credit cards are similar to HELOCs because you can borrow against a line of credit as needed. Unlike HELOCs, however, you don’t need to pay closing costs or risk equity in your home. However, credit cards typically have higher rates than home equity loans and HELOCs. If you don’t pay your credit card balance in full on or before the due date, you could owe hundreds of dollars in interest. Some credit cards offer a 0% introductory APR for a set time period, though. This promotional APR often applies for 12 or 18 months, allowing you to spread your payments over time. A card like this could be worth considering if you need to finance a smaller expense; just ensure you can repay your balance before the promotional period ends. Family loans Another alternative is to ask a family member for a loan. An advantage is that a loved one may loan you money at a lower rate than a traditional lender. If they agree, write the loan terms and repay as promised to avoid harming your relationship.