HELOC/Home Equity

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A PrimeWay home equity line of credit (HELOC) allows you to take advantage of the value you’ve added to your home to secure the line of credit. You can use a line of credit based on the equity of your home for any financial need, including:

  • Consolidate bills and pay off debt
  • Complete a home renovation project
  • Take a much needed vacation
  • Pay for a dream wedding
  • Finance your child's education

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Want to have a loan vs. a line of credit? Check out our Home Equity Loan product.

What is a Home Equity Line of Credit (HELOC)?

A home equity line of credit (HELOC) uses the equity in your home as collateral to borrow money. Equity is the remaining value after you subtract your outstanding mortgage balance from the home's current value.

Because it is a line of credit, a HELOC works similar to a credit card; you can borrow from it as needed, up to the credit line limit. HELOCs have variable, or adjustable, interest rates. This means your monthly payment amount can vary, but you only pay interest on the amount you use, or draw, from the line of credit.

Loan-to-Value Ratio (LTV) Calculation

When considering you for a HELOC, lenders want to know the equity in your home as well as the loan-to-value ratio (LTV). The LTV is calculated by subtracting the amount you currently owe on your mortgage from the current appraised value of your home. Here‘s the basic loan-to-value ratio (LTV) formula:

Current loan balance ÷ Current appraised value = LTV

Lenders are less likely to approve you for a HELOC if you have a high LTV. This is because a high LTV means you have low equity in your home. It is good to know your current LTV as you begin the loan process because it is a consideration in approval.

Combined Loan-to-Value Ratio (CLTV) Calculation

Besides looking at your LTV to understand your available equity, lenders also only loan up to a certain amount based on your combined loan balance—that will be the amount you want to borrow plus your current mortgage balance. Your combined loan balance is used to calculate the current loan-to-value ratio (CLTV).

In Texas, the maximum allowed combined loan-to-value ratio (CLTV) percentage for a HELOC is 80%. This means that the lender allows up to an 80% combined loan-to-value ratio (CLTV) and sets a limit on the total amount you are able to borrow using your home as collateral.

The CLTV is calculated by adding the desired HELOC loan amount you want to your current mortgage loan balance and dividing by your home's current appraised value. Here's the combined loan-to-value (CLTV) formula:

Current combined loan balance ÷ Current appraised value = CLTV

For example, let's say your home has a current appraised value of $500,000 and your current outstanding mortgage balance is $300,000. You want to take out a $40,000 HELOC.

Below are the calculations to determine if adding a HELOC of $40,000 to your existing mortgage would fall within the maximum allowed CLTV of 80%:

Current Equity in Home: 
Current Appraised Value:$500,000
Outstanding Mortgage:($300,000)
Current Home Equity:$200,000
Loan-to-Value Ratio (LTV): 
Outstanding Mortgage/Current Value:$300,000/$500,000
Current Loan-to-Value Ratio (LTV):0.60 or 60%
Combined Loan-to-Value Ratio (CLTV): 
Based on adding $40,000 home equity loan to current mortgage balance. 
Combined Loan Amt/Current Value:$340,000/$500,000
Combined Loan-to-Value Ratio (CLTV):0.68 or 68%

In the example above, based on the equity in the home, a home equity loan of $40,000 added to the existing mortgage loan balance of $300,000 would have a CLTV of 68%, which is within the maximum allowable CLTV of 80%.

Apply Online Today or request more information to have a PrimeWay Representative contact you.

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You can also visit us at one of our convenient retail center locations or call us at (713) 799-6200.

*APR=Annual Percentage Rate. All rates are listed as Annual Percentage Rate (APR). Certain credit criteria and restrictions apply. Loans subject to credit approval. Qualifying rates may be based on a combination of your credit score, the term you select, collateral, lien position, loan-to-value ratio, and other normal lending criteria. Rates are subject to change without notice. Your final APR may vary based upon customary fees and closing costs, which are treatable as interest when calculating your final APR. For more information, please contact a PrimeWay representative at 713-799-6200.