Lenders size home equity products off combined loan-to-value, not off your raw equity — which is why the borrowable amount is always less than the equity you have. This calculator shows the real limit, and for a HELOC, the payment shock waiting at the end of the draw period.
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Most lenders cap combined loan-to-value at 80%–85%. Multiply your home's value by that cap, then subtract everything you still owe. A $500,000 home with a $300,000 mortgage at 85% CLTV supports about $125,000 — not the full $200,000 of equity.
A home equity loan is a lump sum at a fixed rate, amortizing from day one. A HELOC is a revolving line with a variable rate and an interest-only draw period, usually 10 years, after which the balance amortizes and the payment jumps sharply.
The line closes to new draws and the balance re-amortizes over the repayment period, typically 20 years. Because you were paying interest only, the payment can double or more overnight. This is the most common HELOC surprise and worth planning for years ahead.
If your first mortgage carries a below-market rate, almost always yes. A cash-out refinance re-prices your entire balance at today's rate; a HELOC leaves the first mortgage untouched and charges the higher rate only on what you actually borrow.
Both are hard. Lenders generally want a 620+ score and at least 15%–20% equity remaining after the line. If your combined loan-to-value already exceeds the cap, there is no borrowable equity regardless of credit.
Sources: CFPB — What you should know about home equity lines of credit; Federal Reserve — What you should know about HELOCs; Standard amortization (annuity) formula.
Estimates for educational purposes only — not a loan offer, financial advice, or a commitment to lend. Actual rates, payments, and terms vary by lender and creditworthiness.