Who this is for
- Homeowners with 20%+ equity and 680+ credit
- Borrowers funding renovations in phases
- Anyone wanting standby access to equity without refinancing the first mortgage
- Debt consolidation at lower rates than unsecured debt
Typical HELOC Requirements requirements
| Minimum credit score | Typically 680+; some lenders go to 620 with lower CLTV |
|---|---|
| Max CLTV | Usually 80–90% of appraised value across both liens |
| Max DTI | Typically 43–50% including the fully-drawn HELOC payment |
| Draw period | Usually 10 years of draw access, then ~20 years of repayment |
| Minimum draw | Often $10,000–$25,000 initial draw required at some lenders |
| Valuation | Full appraisal, AVM or drive-by depending on line size |
| Occupancy | Primary residences get the best terms; second homes and investment cost more |
| Seasoning | Often 6–12 months of ownership before applying |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Estimate your CLTV: (first mortgage balance + desired line) ÷ home value; target 80–90% or below.
- Check credit; 680 is the practical floor for competitive HELOC pricing.
- Stress-test the payment at the fully-drawn amount plus a rate increase; lenders qualify you on stress, not on the intro rate.
- Compare draw-period terms: interest-only draws vs principal-and-interest change the real cost.
- Watch for early-closure fees and annual fees; they vary more than the rate does.
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Pros and cons
Advantages
- Borrow only what you draw; pay interest only on the balance used
- First mortgage rate stays intact
- Interest may be tax-deductible when used for home improvement
- Reusable during the draw period
Trade-offs
- Variable rate: payments can rise
- Second-lien position means stricter CLTV caps
- Fees for early closure are common
- Easy access tempts over-borrowing
Documents you’ll need
- Photo ID
- Proof of income (pay stubs, W-2s, tax returns)
- First mortgage statement
- Homeowners insurance declarations
- Property tax bill
- HOA information if applicable
HELOC Requirements FAQ
What credit score do I need for a HELOC?
Most competitive HELOCs want 680+. A few lenders approve at 620 with lower combined loan-to-value and higher pricing.
How much can I borrow with a HELOC?
Roughly your home’s value times the lender’s max CLTV (often 80–90%), minus your first mortgage balance.
What is the difference between the draw period and repayment period?
The draw period, usually 10 years, is when you can borrow, repay and re-borrow. After it ends, the repayment period, often 20 years, amortizes whatever balance remains.
Is HELOC interest tax-deductible?
Generally only when the funds are used to buy, build or substantially improve the home securing the loan. Consult your tax professional.
Can I get a HELOC on an investment property?
Some lenders offer them at lower CLTVs and higher rates, but the best HELOC terms are reserved for primary residences.
HELOC or cash-out refinance?
A HELOC keeps a low first-mortgage rate intact and costs less to open; a cash-out refinance replaces the first mortgage, which makes sense when its rate is no longer competitive.
What fees come with a HELOC?
Common ones: annual fee ($50-$75), early closure fee if you close within 2-3 years ($500 or so), and appraisal or valuation fees. Some lenders waive fees for larger lines. Always ask for the full fee schedule, not just the rate.
Can my HELOC rate or line be reduced after opening?
Yes. Most HELOCs let the lender freeze, reduce or suspend the line if your home value drops significantly or your credit deteriorates. It is rare in stable markets but it happened widely in 2008-2009, so do not treat the full line as guaranteed money.
Should I get a HELOC before I need it?
Often yes. Opening a HELOC while your credit, income and home value are strong gives you standby access at the best terms. Applying after a job loss or value drop is much harder. Just avoid the temptation to draw on it unnecessarily.
How HELOC Requirements compare
| HELOC Requirements | HELOCs & Home Equity Loans | Cash-Out Refinance | Rate-and-Term Refinance | |
|---|---|---|---|---|
| Best for | Homeowners with 20%+ equity and 680+ credit | Owners with a low-rate first mortgage | Paying off high-interest debt | Rates dropped since you bought |
| Down payment | , | , | , | , |
| Credit | Typically 680+; some lenders go to 620 with lower CLTV | , | , | , |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
HELOCs & Home Equity Loans
A HELOC (home equity line of credit) and a home equity loan both let you borrow against your home while keeping your current first mortgage.
Cash-Out Refinance
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference in cash, commonly up to 80% of your home’s value on a primary residence.
Rate-and-Term Refinance
A rate-and-term refinance replaces your mortgage with a new one to change the rate, the term or the loan type, without taking cash out.