HELOC in Canada: How Much Equity Can You Actually Borrow?
The 80% combined LTV rule and 65% HELOC cap explained. Learn how much you can borrow against your home equity in Canada and when a HELOC makes sense.
HELOC in Canada: How Much Equity Can You Actually Borrow?
A Home Equity Line of Credit (HELOC) is one of the lowest-cost borrowing tools available to Canadian homeowners — but the amount you can access is strictly regulated and often misunderstood. Here's how the limits work.
The Two Rules That Cap Your HELOC
Rule 1: Combined LTV cannot exceed 80% Your total mortgage-related debt (mortgage balance + HELOC) cannot exceed 80% of your home's current appraised value.
Rule 2: HELOC standalone cannot exceed 65% Even if your combined LTV would allow more, the HELOC portion alone cannot exceed 65% of your home's value.
Example:
- Home value: $800,000
- Mortgage balance: $300,000
- 80% of home value: $640,000
- Maximum total debt: $640,000
- Maximum HELOC: $640,000 − $300,000 = $340,000
- But: HELOC cap is 65% of $800,000 = $520,000
- Your actual HELOC limit: $340,000 (combined rule is binding here)
HELOC vs. Refinancing: Which Is Better?
A HELOC is revolving credit — you draw what you need, pay it back, draw again. Interest is charged only on the outstanding balance, and rates are variable (typically prime + 0.5%–1%).
Refinancing means breaking your mortgage to take a larger fixed loan. It's better for large, one-time expenses where you want a fixed rate and fixed payoff schedule.
For ongoing needs (renovation budgets drawn in stages, emergency reserve), a HELOC often wins. For a single large purchase, a mortgage refinance or second mortgage may be better.
What HELOCs Are Commonly Used For
- Renovations — Stage draws as work is completed
- Investment properties — Use equity in principal residence as down payment
- Bridge financing — Cover the gap when buying before selling
- Emergency reserve — Available but unused, costs nothing until drawn
Important: HELOCs Are Variable Rate
HELOC rates move with the Bank of Canada's overnight rate. When rates rose sharply in 2022–2023, HELOC carrying costs doubled for many Canadians. If you draw heavily on a HELOC, factor in rate sensitivity.
Try the Calculator
→ HELOC Borrowing Power Calculator
Official Resources
- OSFI — Residential Mortgage Underwriting (B-20) — the regulation capping HELOCs at 65% LTV
- FCAC — Home Equity Line of Credit — federal consumer guide to HELOCs
- Bank of Canada — Policy Rate — current overnight rate that drives HELOC pricing
- FCAC — Comparing Mortgage Products — comparing HELOC vs. other mortgage products