Quick answer
Multiply your home’s appraised value by the lender’s combined loan-to-value (CLTV) limit, then subtract everything you owe on the home. On a $360,000 home with $200,000 owed, an 80% limit leaves about $88,000 to borrow; 90% would allow $124,000. Each lender sets its own limit, but Texas caps home equity borrowing on a homestead at 80%, and conventional cash-out refinances stop at 80%.
Key facts
Equity, LTV and CLTV
Three numbers decide how much you can borrow against your home:
- Equity — the home’s current value minus everything secured by it. A $360,000 home with a $200,000 mortgage has $160,000 of equity.
- Loan-to-value (LTV) — your first mortgage as a share of the value: $200,000 ÷ $360,000 = 55.6%.
- Combined loan-to-value (CLTV) — all loans on the home, including the new HELOC or home equity loan, as a share of the value. This is the number lenders cap.
The formula for the most you can borrow is:
Home value × CLTV limit − all existing loans on the home = maximum new loan or line
Lenders keep the rest as a cushion in case prices fall or they need to foreclose. If you already have a HELOC, many lenders count its full credit limit, not just the balance.
How much you can borrow at different limits
Lenders set their own CLTV maximums, and they often vary with your credit score, the loan size and whether the home is your main residence. The percentages below are examples to show the math, not offers.
| Lender’s CLTV limit | Most total debt | $150,000 owed | $200,000 owed | $250,000 owed | $300,000 owed |
|---|---|---|---|---|---|
| 75% | $270,000 | $120,000 | $70,000 | $20,000 | None |
| 80% | $288,000 | $138,000 | $88,000 | $38,000 | None |
| 85% | $306,000 | $156,000 | $106,000 | $56,000 | $6,000 |
| 90% | $324,000 | $174,000 | $124,000 | $74,000 | $24,000 |
Two things stand out. First, a few points of CLTV make a large difference: on this home, each 5 points is worth $18,000. Second, if you owe a lot, you may have little or nothing to borrow even with a generous limit — at $300,000 owed, an 80% cap leaves nothing.
Estimate the value
Look at recent sales of similar homes nearby. National prices rose 2.4% over the past year in FHFA’s index, but your street can differ.
Add up what you owe
Your mortgage balance, plus any existing HELOC limit or second loan, from your latest statements.
Apply a limit
Multiply the value by the lender’s CLTV cap (in Texas, no more than 80%).
Subtract and adjust
Take away what you owe, then allow for closing costs and the chance that the appraisal comes in lower than your estimate.
The Texas 80% rule
In Texas, the cap is written into the state constitution, which limits home equity borrowing on a homestead — home equity loans, HELOCs and cash-out refinances alike — to 80% of the home’s fair market value, including the existing mortgage. On the example home that is $88,000, however generous a lender wants to be.
Texas adds other guardrails: lender fees are capped at 2% of the loan amount (on $88,000, that is $1,760, with some costs such as the appraisal and survey excluded), closing can’t happen until 12 days after you apply, and a new home equity loan generally can’t close within 12 months of the previous one. See the Texas guide and home equity loan requirements.
Cash-out refinance limits
A cash-out refinance uses the same math on a single new first mortgage, with limits set by the loan program:
| Program | Maximum LTV | On the $360,000 home with $200,000 owed |
|---|---|---|
| Conventional (Fannie Mae, one-unit main home) | 80% | $88,000 |
| FHA | 80% | $88,000 |
| VA (lenders may set lower) | 100% | $160,000 |
Figures are before closing costs and fees. Cash-out refinance vs HELOC compares the monthly cost.
The appraisal sets the value
Your estimate doesn’t count; the lender’s valuation does. Depending on the loan size and its own rules, a lender may order a full appraisal with an interior inspection, a limited exterior or desktop appraisal, or rely on an automated valuation model built from sales data.
What a lower appraisal does — $360,000 estimate, $200,000 owed, 80% limit
| Appraised value | Most you can borrow |
|---|---|
| $360,000 (your estimate) | $88,000 |
| $342,000 (5% lower) | $73,600 |
A 5% lower value cuts the borrowing room by $14,400, or 16.4%, because the whole shortfall comes out of the equity you can tap.
If the value looks wrong, ask the lender which method it used and how to request a reconsideration, with recent comparable sales. For a cash-out refinance, which is a first mortgage, the lender must give you a copy of the appraisal promptly, and no later than 3 business days before closing.
Equity isn’t the only limit
Even with plenty of equity, the lender must be satisfied you can repay. Your credit score, income and debt-to-income ratio decide whether you qualify and at what margin or rate, and some lenders set minimum and maximum line sizes. Borrowing the full amount also leaves you less cushion if prices fall — see risks of borrowing against your home. The HELOC payment calculator shows the payment on any amount.
Frequently asked questions
How do I calculate how much equity I can borrow?
Multiply the home’s value by the lender’s combined loan-to-value limit and subtract everything you owe on the home. On a $360,000 home with $200,000 owed, an 80% limit gives $88,000.
What is combined loan-to-value (CLTV)?
The total of all loans secured by the home — first mortgage, any HELOC or home equity loan, and the new loan — divided by the home’s appraised value. Lenders cap CLTV rather than the new loan alone.
Can I borrow 100% of my home equity?
Rarely. Lenders keep a cushion and cap the combined loans below the full value. VA cash-out refinances are the main exception: VA rules allow up to 100% of the value, though lenders may set lower limits and a funding fee applies.
How much equity do I need for a HELOC?
Enough that your mortgage plus the new line stays within the lender’s CLTV limit. If a lender caps CLTV at 80% and you owe 70% of the value, you could borrow only about 10% of the value.
What is the Texas 80% rule?
The Texas Constitution limits home equity borrowing on a homestead, including the existing mortgage, to 80% of fair market value. It applies to home equity loans, HELOCs and cash-out refinances.
Does my home need an appraisal for a home equity loan?
The lender needs a value, but not always a full appraisal. Depending on the loan and its policies, it may use an exterior or desktop appraisal or an automated valuation model. Ask which method it will use and what it costs.
Sources
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- Texas Constitution, Art. XVI §50(a)(6)(E) — Texas home equity fee cap (share of original principal); Maximum combined loan-to-value for Texas home equity loans; Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017)
- Fannie Mae Eligibility Matrix — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026)
- HUD Mortgagee Letter 2019-11 — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019)
- 38 CFR 36.4306 — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026)
- FHFA House Price Index — US house prices, 12-month change (FHFA HPI) (August 2026)
- CFPB, Regulation B 1002.14 — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026)
- CFPB: What is a home equity line of credit (HELOC)?
- Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.