How To Get a High-LTV Home Equity Line of Credit (or Home Equity Loan)
A high-LTV home equity line of credit (HELOC) allows you to borrow above the typical 85% maximum of your home’s value — sometimes even up to 100%.
Those funds can help you reach some big financial goals, but tapping your home equity also comes with risks and costs you should know.
- High-LTV home equity loans and HELOCs let you borrow up to 100% of your home’s value.
- You’ll likely need a good credit score and manageable debt to qualify for a high-LTV loan.
- Using a high-LTV HELOC or home equity loan puts your home at risk if you can’t keep up with payments.
We’ll cover how to decide if a high-LTV home equity loan or HELOC is a good idea in your situation, whether you’re likely to qualify and how to find a lender.
What is a high-LTV HELOC or home equity loan?
A high-LTV home equity line of credit allows you to borrow more than the typical 80% to 85% combined loan-to-value (CLTV) ratio limit.
Some lenders offer loans that let you borrow 90% to 100% of your home equity, though they usually require stronger credit, lower debt-to-income ratios and higher interest rates.
Lenders do a few specific calculations to set the limit on how much home equity you can convert to usable funds with one of these loans. Here’s what you need to know:
How to calculate your home equity
Your home equity is the difference between what your home is worth and what you owe on any mortgage loans taken out to pay for it. To calculate it, simply subtract the balances of any outstanding loans from your home’s appraised value:
Your home equity = Home appraisal value – Sum of loans owned on your home
The number you get is your ownership stake in the home.
If your home was appraised at $400,000 and your current mortgage balance is $300,000, you have $100,000 in home equity.
Since your equity and loan-to-value (LTV) ratio are crucial to knowing how much financing you may qualify for, it’s essential to understand what these figures truly represent and how to calculate them.
LTV ratio
An LTV ratio expresses how much of your home’s value you’re borrowing when you take out a loan. Lenders set a maximum LTV ratio to cap how much you can borrow.
CLTV ratio
Combined loan-to-value (CLTV) ratio includes both your original mortgage and the new loan against your equity. When taking out a second mortgage, like a home equity loan or HELOC, lenders will evaluate this number.
How to calculate your LTV ratio
1. Divide your current loan balance by your home’s value.
2. Convert that number to a percentage by moving the decimal point two places to the right.
Here’s an example of an LTV calculation for a homeowner with that same $400,000 house and $300,000 loan balance.
$300,000 ÷ $400,000 = 0.75
LTV = 75%
How to calculate your CLTV ratio
1. Add your loan balances together.
2. Divide that amount by your home’s value.
Following our earlier example, if a homeowner with a $400,000 home and $300,000 first mortgage balance wanted to take out a $20,000 home equity loan, their CLTV ratio would be 80%. Here’s the math:
$300,000 + $20,000 = $320,000
$320,000 ÷ $400,000 = 0.80 or 80% CLTV
Do I need a high-LTV HELOC or home equity loan?
You’ll need a high-LTV loan option if your current mortgage’s LTV ratio is above 85%, or if adding a second mortgage would push your LTV above 85%.
For example, let’s say you already have a mortgage with an 85% LTV ratio and you’re looking to take out a second mortgage, like a HELOC or home equity loan. The second mortgage would be considered a high-LTV loan, because its LTV ratio combined with your first mortgage’s LTV will be higher than 85%.
As we covered earlier, lenders will calculate your second mortgage’s LTV by combining all of your mortgage debt into a combined LTV.
Unsure which loan type is best for you? Explore our HELOC vs. home equity loan page.
How much can I borrow with a high-LTV loan?
If you need a high-LTV home equity loan or HELOC, you can calculate how much money that represents using the following steps:
- Convert your lender’s LTV limit to a decimal by moving the decimal point two places to the left and removing the percent sign. (Example: 95% → 0.95)
- Multiply your home’s value by that LTV limit
- Subtract your outstanding mortgage balance
The result is your potential home equity loan or HELOC amount.
Use LendingTree’s home equity loan and HELOC calculator to quickly calculate how much you can borrow within the standard 85% LTV limit.
High-LTV HELOC lenders
The table below outlines lenders that offer both high-LTV HELOCs and home equity loans:
| Lender | Max LTV / CLTV | Available loan types |
|---|---|---|
| Spring EQ | 90% | HELOCs and home equity loans |
| Better Mortgage | 90% | HELOCs and home equity loans |
| Navy Federal Credit Union | 95% to 100% | HELOCs and home equity loans |
| Signature Federal Credit Union | 100% | HELOCs and home equity loans |
| Arsenal Credit Union | 100% | HELOCs and home equity loans |
As shown above, some lenders offer 90% to 100% LTV HELOCs or home equity loans. This means you can convert most or all of the equity you’ve built in your home into usable funds.
Some 100% LTV HELOCs and home equity loans may also come with other unique features or perks. For example, Arsenal offers no-closing-cost loans, while Signature Federal offers closing-cost savings of up to $1,000.
If you’re taking out a second mortgage without paying closing costs, be sure to read the fine print. Here are two big things to look out for:
- Early payoff penalties. You may be on the hook for those closing costs, after all, if you pay off and close the loan too quickly. That could mean within three years, or sometimes even less time. Keep in mind that home equity loan closing costs typically range from 2% to 5% of your loan amount.
- Higher loan costs. A no-closing-cost mortgage can help when you’re short on cash, but lenders typically charge you higher interest rates or increase your loan amount to make up for it. Be sure the money you save in the short term is worth these increased costs over the long haul.
Pros and cons of a high-LTV loan
Pros
- You have both fixed and variable interest rate options. Home equity loans come with fixed rates, which means you’ll have the stability of a fixed monthly payment. On the other hand, HELOCs — which typically come with variable rates — give you more flexibility to use and reuse your credit line.
- You can use your loan proceeds for any purpose. The real challenge is in deciding whether it’s worth losing most or all of your available home equity to achieve your intended financial goal.
- You can borrow against your house, even as a brand-new homeowner. With lenders willing to provide up to 100% LTV home equity loans, you can access significant financing even if the ink on your closing documents is barely dry.
Cons
- Second mortgage rates are typically higher than first mortgage rates. That’s because second mortgages are riskier for lenders, since they’re second in line when debt has to be repaid in a foreclosure sale. Home equity rates can go even higher if you’re looking for a 100% LTV loan.
- Your home is being used as collateral for two mortgages at once. You’re taking out another mortgage on your home when you borrow against your home equity. If you neglect to repay either loan, you’re putting your home at risk of foreclosure.
- Home values could drop and put you “underwater” on your first and second mortgages. If this happens, you’d owe more on your home than what it’s worth and lose the equity you’ve built. Having negative equity can also make refinancing or selling your home more complicated.
How to qualify for a high-LTV HELOC or home equity loan
Equity-tapping loans typically require you to have good credit, manageable debt and a decent amount of home equity. For more details, jump to our home equity loan requirements or HELOC requirements guides.
The higher your LTV, though, the higher the bar may be for qualification. Based on LendingTree marketplace data, borrowers approved for a high-LTV home equity loan or HELOC had an average:.
- 743 credit score
- 89% CLTV ratio
And while it was common for borrowers to have an LTV above 90%, only a small minority — less than a quarter of those for whom we have DTI data — had a 95% DTI or higher.
Yes, some lenders set a minimum borrowing amount because underwriting the loan may not be worth a lender’s time and effort if the amount is too small. In many cases, that minimum might be around $10,000 to $25,000.
What if I don’t qualify for a high-LTV HELOC?
If you aren’t yet eligible to borrow a high-LTV second mortgage, there are a few things you can do to work toward qualifying later:
- Build more equity. The more equity you have, the better your chances are of qualifying for a loan with a high LTV. Your best bet for improving your LTV ratio is to pay down your mortgage balance as quickly as you can.
- Improve your credit score. Take some concrete steps to boost your credit score. LendingTree Spring can help you evaluate which factors may give your score the most help.
- Reduce your DTI ratio. Pay off those credit cards and shrink your auto, personal and student loan balances. Lenders want to see that you can handle extra debt without stretching yourself too thin.
Or, you may want to explore alternative loan options below.
Is it a good idea for me to get a high-LTV HELOC?
How you can best leverage your home equity depends greatly on your financial situation and goals. There are many good reasons a homeowner may choose to borrow from their home equity, including:
- Buying an investment property. You could use some of your equity as a down payment to purchase an investment property, which could be used to host Airbnb guests or rent to long-term tenants, building a passive income stream.
- Consolidating high-interest-rate debt. Getting rid of balances on high-interest credit cards or loans could be a good reason to tap your equity. The interest rate you receive on a home equity loan is likely to be significantly lower than other financial products.
- Covering home improvement projects. If you’ve wanted to upgrade your bathroom or kitchen, a home equity loan or HELOC might make sense. Not only can home improvements potentially boost your home’s value, but they can also provide tax benefits. Generally speaking, IRS rules allow you to deduct the interest paid on mortgages used to “buy, build or substantially improve” a home worth up to $750,000 (this includes second mortgages).
- Paying for higher education. As college tuition costs continue to soar, many families are looking for ways to cover those expenses outside of borrowing student loans.
- Making ends meet during retirement. Retirees often struggle with living on a fixed income. A home equity loan or HELOC can provide extra funds to fill in the gaps.
If you’re thinking about using your home equity to finance nonessentials like a dream vacation, expensive wedding or luxury car, you should consider saving more aggressively instead. Don’t forget that you risk losing your home to foreclosure if you fall behind on your second mortgage payments.
Alternatives to a high-LTV HELOC or home equity loan
| Alternative | How it works | Interest rate competitiveness | Best for … |
|---|---|---|---|
| Cash-out refinance | You’ll replace your current mortgage with a larger one and receive the difference in a lump sum. | Lowest | Homeowners who can benefit from refinancing in today’s rate environment, or who don’t want to juggle two mortgages. |
| Personal loan | You’ll receive a lump sum and pay it back in equal monthly installments. | Slightly higher | Borrowers who need smaller loan amounts. |
| Reverse mortgage | You’ll receive a lump sum payout (or multiple payouts) secured by your home equity. You won’t have to make any payments unless you move or sell the home. | Highest | Homeowners who are at least 62 years old. |
Frequently asked questions
Some credit unions and specialty lenders offer HELOCs with combined loan-to-value ratios up to 100%, though they typically require a strong credit profile and low debt-to-income ratios.
Most lenders require you to have solid credit. The credit score required for a normal HELOC is typically 620, but for loans above an 85% CLTV, you may need at least a 760.
Borrowing at high LTV levels increases the risk of negative equity if home prices fall.
Yes, many lenders offer $500,000 HELOCs, including Bank of America, PenFed Credit Union and Navy Federal Credit Union. However, most lenders don’t offer $500,000 high-LTV HELOCs. Of the lenders mentioned, only Navy Federal and Better Mortgage offer $500,000 high-LTV HELOCs.
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