Our take in 10 seconds
Multiply your home's value by the lender's CLTV cap (usually 80–85% for strong credit, lower as credit weakens), subtract your mortgage balance, and that's your ceiling. A $400,000 home with a $250,000 mortgage at an 80% cap gives you $70,000 of borrowing power. Weak credit doesn't just raise your rate — it shrinks the cap, sometimes to zero at banks. That's when the alternatives with equity-based approval enter the picture.
The formula
The whole calculation, one line
Worked example: $400,000 home
Home value$400,000
Lender cap (80% CLTV)× 0.80 = $320,000
Current mortgage balance− $250,000
Maximum you can draw$70,000
Run your own numbers the same way. If the result is small or negative, you don't have a product problem — you have an equity problem, and no lender or alternative fixes that. If the result is substantial, the next question is which product actually lets you reach it.
By product
What each product actually allows
| Product | Typical CLTV cap | Credit reality |
|---|
| Bank HELOC | 80–85%, best pricing under 70% | ~640–660 minimum; advertised rates assume ~780 |
| Home equity loan | 80–85%; some flexible lenders to ~90% at a price | ~620+ at non-bank lenders |
| Cash-out refinance | 80% conventional; FHA similar with more credit flexibility | ~580+ FHA in principle |
| Home equity investment (HEI) | Provider-specific; requires a substantial equity stake | ~500+ at some providers — equity is the gate |
How credit shrinks the cap: the same lender that allows 85% CLTV at a 760 score may cap you at 70% at 640 — or decline entirely below that. So a weaker score cuts your borrowing power twice: less allowed against the home, at a higher price. If your score is within reach of the next tier,
six months of credit repair often unlocks more money than switching products ever will.
The other gates
Three things that override the formula
Debt-to-income. Loan products underwrite your payment capacity — most want DTI under about 45% including the new payment. Plenty of homeowners have the equity but fail here. (Check yours.) HEIs skip this gate entirely because there's no payment to prove you can make.
The appraisal. Your number is only as good as the value the appraiser assigns. If you're borderline, small presentation work before the appraisal — repairs completed, documentation of improvements — is the cheapest leverage you have.
Product minimums and maximums. Most home equity loans want draws of $10,000+; HEIs typically start around $15,000–$30,000 and run to $500,000–$600,000. If you need less than about $30,000, seriously consider a personal loan instead — no appraisal, no lien, funded in days, and your house stays out of it entirely.
The order of operations: run the formula, check your DTI, then match the product to your two constraints — credit tier and whether your budget can carry a payment. Strong credit and payment room: bank HELOC or equity loan. Weak credit but payment room: flexible-lender equity loan. No payment room:
the HEI structure exists for exactly this case. Under $30k either way: personal loan first.
Who gets paid on this page
Upstart — if you check your rate and take a personal loan through our linkpays us a commission
Banks, HEI providers, and everyone else discussedpays us $0
Frequently asked questions
How much equity can I borrow from my home?
Typically up to 80–85% of your home's value minus your mortgage balance, with the cap shrinking as credit weakens. A $400,000 home with $250,000 owed yields about $70,000 at an 80% cap. Home equity investments use their own equity-stake requirements rather than standard CLTV caps.
How much equity do I need for a HELOC?
Enough that your combined loans stay under the lender's cap — usually you need at least 15–20% equity remaining after the draw. The best pricing generally goes to borrowers keeping CLTV under 70%, which is why advertised rates rarely match reality.
Can I borrow against my house with bad credit?
Bank products mostly close below the mid-600s, but the menu doesn't: flexible-lender home equity loans go to about 620, FHA cash-out to about 580, and home equity investments approve around 500 because they underwrite the equity rather than the borrower. See
the full bad-credit menu.
Does borrowing against your home hurt your credit?
Applications add a hard inquiry, and a new loan or line changes your profile — usually a modest, temporary dip, followed by improvement with on-time payments. The bigger credit risk is overextending: an equity loan payment you can't sustain endangers both your score and the house.
What's the cheapest way to borrow against a house?
With strong credit, a HELOC or home equity loan at a bank. With weak credit, compare a flexible-lender equity loan against an HEI using total-cost math, not monthly payments — and for amounts under about $30,000, price a personal loan first so the house isn't collateral at all.