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How Much Can I borrow

For typical home equity loans, 80% is the magic number.  That's because lenders feel most comfortable when you keep your loan-to-value (LTV) ratio at 80% or below.  To calculate your loan-to-value ratio, simply divide the total amount of borrowed money by your home's value.

For example:  Let's say your home is worth $100,000 and you have a $60,000 first mortgage.  In this case, your LTV would be $60,000/$100,000, or 60%. If you get a $20,000 home equity loan, your LTV goes up to $80,000/$100,000, or 80%.

Higher LTV

As we mentioned earlier, most lenders let your first mortgage and your home equity loan equal 80%.  However, some lenders will approve loans of between 80-90% LTV; some lenders even go up to 125% LTV.  Of course, the higher your LTV, the higher your interest rate, since high LTV loans are riskier for the lender.

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