Can I increase my HELOC limit?

Yes, you might be able to increase your home equity line of credit (HELOC) limit if your home value has increased, your mortgage balance has decreased, or your financial profile has improved. Your lender will typically review factors like your home equity, credit history, and income before making a decision.

Increasing your HELOC limit could give you access to more funds for expenses like home improvements, debt consolidation, or unexpected costs. However, approval isn’t guaranteed.

Start by contacting your current lender to learn about your options. You might also want to compare other borrowing choices, such as a new HELOC or home equity loan, before deciding what works best for your situation.

What factors determine your HELOC limit?

HELOC loan limits depend on several factors, with the most important being your home’s current market value and how much equity you’ve built. Lenders normally put a ceiling on how much you can borrow using combined loan-to-value (CLTV) ratio. CLTV is your total housing debt, including your primary mortgage and any home equity loans or HELOCs.

Your financial profile matters, too. A higher income, stronger credit score, and steady employment might improve your chances of qualifying for a higher credit limit. Lenders also review your payment history, including on your existing HELOC and other debts, and check your debt-to-income (DTI) ratio to see how much of your income goes toward debt every month.

Even if you’ve qualified for a HELOC before, your lender will most likely review your current finances when you request a higher limit. Your lender’s own HELOC policies could also affect whether you’re approved. Lenders sometimes adjust their lending policies. If your lender has pulled back its CLTV limit or tightened other requirements, that could make it harder to get a higher limit.

How to increase your HELOC limit

There are several ways to increase your home equity line of credit limit. The best option depends on your lender's policies, how much equity you have, and whether your financial situation has changed since you opened your HELOC.

Request a credit limit increase

Start by contacting your current lender. Some lenders let existing customers request a higher credit limit without opening a new HELOC, which is often simpler and less expensive than replacing your loan.

As part of the review, your lender might verify your home’s current value. Lenders typically do this with an appraisal or an automated valuation model (AVM). You’ll likely need to provide updated financial documentation, such as pay stubs and bank statements. Expect the lender to run a credit check on you, as well.

If the lender approves your request, you’ll typically keep the same HELOC account with a higher credit limit. If your lender won’t increase your credit limit, ask why. This can help you figure out if it’s worth applying with another lender, or if you’re likely to get the same response.

Refinance

Refinancing a HELOC means opening a new, larger HELOC to pay off your existing loan. This requires you to have enough equity in your home to qualify for the larger limit. You also need to meet the lender's other criteria, like credit score and income.

If you refinance with a new HELOC with longer terms, you'll get more time to repay your loan, but you'll also pay interest for longer. Refinancing also generally requires paying new loan fees, such as origination fees or other closing costs.

Add a second HELOC

You could keep your current HELOC and apply for a second one with another lender. The process is similar to refinancing in that you need to meet the new lender’s HELOC requirements and pay new loan fees. Instead of paying off your first HELOC with the new one, you keep both.

This option is uncommon, as most lenders prefer refinancing to consolidate everything into one HELOC. If you have two HELOCs, the issuer of the second is normally the last in line to get paid if you default, so it’s taking the most risk. However, some lenders may be open to it. Make sure your repayment plan fits comfortably within your budget if you decide to add a second HELOC.

Why a lender might say no to raising your HELOC limit

A lender might say no to raising your HELOC limit for a few reasons, including your home's equity, your credit, or your income. Here's more information on each one.

CLTV caps

CLTV ratio measures the total amount of debt secured by your home, including your mortgage and any home equity loans or HELOCs, compared to your home's current value. Most lenders have a CLTV limit of 80% to 90% of your home's value.

For example, if your mortgage balance is $300,000 and your HELOC is $100,000, you have $400,000 in debt secured by your home. If your home is worth $500,000, your CLTV is 80%: 

$400,000 ÷ $500,000 = 0.80 × 100 = 80% 

If your lender’s maximum CLTV is 80%, you likely won’t qualify for a higher HELOC limit unless your home’s value increases, you pay down your mortgage or HELOC balance, or the lender’s borrowing limits change.

Credit score

Secured loans like HELOCs tend to have more flexible credit requirements than other types of credit, but most lenders will still have some sort of minimum credit score. If your credit score has declined or hasn't improved since you opened your HELOC, your lender could decide not to approve a higher HELOC limit. A stronger credit profile could improve your chances, but it’s only one part of the approval process.

Insufficient income or high DTI ratio

Part of your HELOC limit is determined by how much the lender thinks you can afford. If your income isn't high enough to cover a larger credit limit, the lender is unlikely to give you one. 

Your DTI ratio also plays a role here. Most HELOC lenders have DTI caps of 43% to 50%. If too much of your income is going to debt payments, the lender could decline to increase your HELOC limit for that reason.

Is HELOC interest tax-deductible if you increase your limit?

It can be in specific circumstances and up to the applicable IRS limit. Interest on a HELOC is tax-deductible when the funds are used to buy, build, or substantially improve the home securing the loan. That rule applies to any limit increases, as well.

The IRS allows homeowners to deduct mortgage interest on the first $750,000 of mortgage debt ($375,000 if married filing separately). This cap is for total home debt, including your primary mortgage and HELOC. You must itemize your deductions to deduct mortgage or HELOC interest. You can’t claim it if you take the standard deduction.

Using the funds for other purposes, like debt consolidation or everyday expenses, generally doesn’t qualify. This could matter if you’re increasing your limit specifically to fund a renovation or addition, since that's the kind of use the deduction is designed for.

Tax rules around home equity interest have changed before, so don't rely on assumptions when you file. A tax professional can confirm whether your specific situation qualifies and how much of the interest you can deduct.

What are your alternatives if a lender won't increase your limit?

Being told no is always disappointing, but in this case, you might still have other options. Here are some alternate strategies to think about.

Consider a personal loan

Like a HELOC, personal loans can typically be used for many different expenses. If you have at least fair credit and your debt-to-income (DTI) ratio is low enough, you might be able to qualify for a personal loan that provides the funds you're looking for.

Look into a cash-out refinance

If you have a good deal of equity, a cash-out refinance could work for you instead. With a cash-out refinance, you get a new, larger mortgage loan that can pay off your existing mortgage plus your current HELOC—and, ideally, leave you with some extra cash.

Keep in mind that lenders typically have equity requirements, and you might need to leave some equity in your home after closing. Since a cash-out refinance is a new mortgage, you also get a new mortgage rate. That might or might not be worth it depending on your current mortgage rate and why you need the cash.

Save up the cash

In some cases, the best move is simply to save up the cash instead of increasing your HELOC limit, depending on why you want the higher limit in the first place.

A flooded basement likely can’t wait, but a kitchen remodel or a backyard project probably could. If your timeline allows it, saving up and paying cash could help you avoid taking on more debt altogether.

Considering a new HELOC? Get a no-obligation estimate through Achieve Loans.