A HELOC, or home equity line of credit, lets eligible homeowners access a revolving line of credit secured by the available equity in their home.
How it works
Rather than a single lump sum, a HELOC gives you a credit limit you can draw from, repay, and reuse, similar to a line of credit but secured by residential equity.
Why business owners consider it
For eligible homeowners, a HELOC can be one way to access capital for the business. Because it is secured by your home, it carries different considerations than unsecured business financing.
Important considerations
A HELOC is secured by your residence, so it should be approached carefully. Eligibility, available equity, and terms all depend on your specific situation and are subject to underwriting.
How the structure works
Property value − First mortgage − Other liensGross equity vs available credit
| Measure | How it is calculated |
|---|---|
| Gross equity | Property value minus all existing property debt |
| Combined loan ceiling | Property value multiplied by the program’s maximum CLTV |
| Potential new credit | Combined loan ceiling minus existing liens, subject to approval |
Gross equity is the larger, simpler number. Availability is constrained by the program ceiling, which is why the two rarely match.
Draw, repay, reuse
- Availability is restored as the drawn balance is repaid
- Interest generally accrues on what is drawn, not the full line
- The property secures the line, and lien position matters
- Draw periods and repayment periods can differ
Related financing
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