How Do You Get a Home Equity Line of Credit (HELOC)?

By Christopher Armantrout, Licensed Mortgage Loan Originator · NMLS #1210804Published May 15, 2026 · Last updated October 26, 2026Rules accurate as of October 2026

Rules on this page were verified in October 2026. Lender HELOC terms vary and change often. See the CFPB’s HELOC brochure.

What is a home equity line of credit?

A HELOC is a revolving line of credit secured by your home, usually in second position behind your first mortgage. You borrow what you need, when you need it, up to the limit. You pay interest only on the amount you have drawn, and as you repay, that credit becomes available again during the draw period. Because the house is the collateral, missing payments puts the home at risk.

How much can you borrow with a HELOC?

Lenders size a HELOC by the combined loan-to-value ratio (CLTV): your first mortgage balance plus the full HELOC limit, divided by the home’s value. Common maximums run from 80% to 90%, depending on the lender, your credit, and whether it is your primary home.

Here is an illustrative Robertson County home valued at $350,000 with $200,000 left on the first mortgage:

Illustrative example only. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. The line you are offered also depends on credit, income and the valuation.

What do you need to qualify for a HELOC?

• Equity: enough room under the lender’s CLTV limit, as in the table above.
• Credit: each lender sets its own minimum score, and better credit can widen the CLTV limit.
• Debt-to-income ratio: the lender counts a payment on the line, often at the full limit, alongside your other debts.
• Documents: typically your most recent 30 days of pay stubs, two years of W-2s (or tax returns if self-employed), two months of bank statements, a government ID, your current mortgage statement and your homeowners insurance declarations page.
• Property: most HELOCs are for owner-occupied homes. Second homes and rentals have fewer options and tighter limits.

What are the steps to get a HELOC?

1. Estimate your equity. Use your mortgage statement for the balance and recent nearby sales for the value. The lender’s valuation sets the final number.
2. Decide what the money is for. A HELOC fits uneven or ongoing costs, such as a renovation paid in stages. One lump sum may fit a fixed-rate home equity loan or a cash-out refinance better.
3. Compare offers. HELOCs come mostly from banks and credit unions, so get quotes from two or three. Ask each lender for the index, the margin, any introductory rate and when it ends, rate caps, the length of the draw and repayment periods, minimum draw amounts, annual fees, and early-closure or inactivity fees. Lenders must give you the HELOC disclosures required by Regulation Z §1026.40 when you apply.
4. Apply. Submit the documents above. The lender pulls credit and verifies income and employment.
5. Get the home valued. Depending on the line amount and the lender, this may be a full appraisal, a drive-by appraisal or an automated valuation.
6. Close. You sign the agreement and a deed of trust. On your primary home, you then have a three-business-day right to cancel, and the line opens for draws after that.
7. Draw and repay. Draw by check, transfer or card, depending on the lender, and make at least the minimum payment each month.

Typical recent timelines have been approximately two to six weeks from application to an open line. Underwriting and valuation times are not guaranteed.

How does a HELOC work after you get it?

A HELOC has two phases. During the draw period, often 10 years, you can borrow and repay freely. Many plans require only interest payments during this period. In the repayment period, often 10 to 20 years, you can no longer draw, and payments include principal, so they usually rise. Some plans instead require the full balance at the end of the draw period as a balloon payment.

Most HELOC rates are variable and tied to a public index, commonly the prime rate, plus a margin. Your payment can change even if you don’t borrow more.

How does a HELOC compare with a home equity loan or a cash-out refinance?

Which option costs less overall depends on your current rate, how much you need, how long you will carry the balance, closing costs and lender pricing. Valor Mortgage does not offer HELOCs, but we do arrange cash-out refinances; see our refinance page and debt consolidation page for that side of the comparison.

What are the risks and catches?

• Your home is the collateral. Falling behind can lead to foreclosure.
• Payments can rise when the index rises or when the draw period ends.
• The lender can freeze or reduce your line if your home’s value drops significantly or your finances change materially, as the CFPB brochure explains.
• Tax treatment depends on use. Under IRS Publication 936, interest is deductible only to the extent the money buys, builds or substantially improves the home securing the line. Ask a tax advisor.
• Selling or refinancing means paying off the HELOC, or having the HELOC lender agree to stay in second position behind a new first mortgage.

HELOC FAQ

Where these rules come from

Related guides

• What is a home equity line of credit (HELOC)?
• Refinancing with Valor Mortgage, including cash-out options.
• Debt consolidation with your home equity.
• What is a home appraisal?
• Robertson County mortgage guide.
• About Christopher Armantrout, the licensed originator who wrote this page.

Comparing a HELOC with a cash-out refinance? Talk to Valor Mortgage.

Valor Mortgage doesn’t offer HELOCs; for a line of credit, your bank or credit union is the place to start. What I can do is quote a cash-out refinance, so you can set it beside the HELOC offers you get and compare the total cost over the time you expect to carry the balance.