This guide shows how to work out your own HELOC room and what interest-only payments cost over five years.

The short answer

At a federally regulated lender, the revolving HELOC part can be no more than 65% of your home’s value, and the HELOC plus your mortgage can total no more than 80%. On an $800,000 home with $400,000 still owing, that leaves room for a HELOC of up to $240,000.

Your maximum is the lower of two numbers: 65% of the home’s value, or 80% of the value minus your mortgage balance. That is a ceiling, not an approval. The lender still looks at your income, debts, credit and appraisal, and can offer less.

Where the 65% and 80% limits come from

The limits are set by the Office of the Superintendent of Financial Institutions (OSFI), which oversees banks and other federally regulated lenders. Its Guideline B-20 says lenders should limit the non-amortizing HELOC part of a mortgage to a loan-to-value ratio of 65% or less. A non-amortizing loan is one with no set schedule to pay off the principal.

A separate OSFI advisory on combined loan plans fills in the rest. It says any lending above 65% should be amortizing and non-readvanceable, and that the overall limit of a combined plan cannot exceed 80% loan-to-value. The Financial Consumer Agency of Canada (FCAC) puts it simply: with a HELOC, you may borrow up to 65% of your home’s value.

These rules bind banks and other federally regulated lenders. Most credit unions answer to their province and set their own policies, so their limits can differ.

How much HELOC room you have, by mortgage balance

Here is the same formula applied to a hypothetical $800,000 home at five mortgage balances. 65% of the value is $520,000 and 80% is $640,000.

Hypothetical example. Maximum HELOC is the lower of the two caps. The home value is the lender’s appraised value, not your own estimate.

Notice the pattern. With no mortgage, the 65% cap is the binding limit, so you can never borrow the full 80% on a revolving line. Once you owe more than 15% of the home’s value, the 80% cap takes over and every dollar of mortgage cuts a dollar of HELOC room.

To check your own number, multiply your home’s value by 0.80, subtract your mortgage balance, and compare the result with 65% of the value. The FCAC uses the same logic in its own example: with $200,000 of total borrowing room and $150,000 still owing on the mortgage, the most you could still borrow is $50,000.

What a HELOC costs: prime plus a premium

HELOC rates are almost always variable. The FCAC’s research on home equity lines of credit says consumers can generally get a HELOC at the lender’s prime rate plus 0.5 to 2 percentage points.

Prime moves with the Bank of Canada. The Bank raised its policy rate to 2.50% on October 28, 2026, and lenders followed. BMO raised its prime from 4.45% to 4.70%, and National Bank also moved to 4.70%, both effective October 29, 2026. At 4.70% prime, a HELOC priced at prime plus 0.5 to 2 points costs about 5.20% to 6.70%. Our rate hike explainer covers what else changed.

Every 0.25-point change in prime adds or removes about $10.42 a month in interest on a $50,000 balance. That October hike alone took the interest on $50,000 at prime plus 0.5 from $206.25 to $216.67 a month.

The interest-only trap, worked out

The FCAC says most HELOC borrowers are allowed to make interest-only payments, and the line has no maturity date. Its research found that roughly 4 in 10 consumers do not make a regular payment against their HELOC principal. Here is what that choice costs on a $50,000 balance at 5.20%, prime plus 0.5.

Hypothetical example. Assumes the rate stays at 5.20% and interest is charged monthly at 5.20% divided by 12. Your lender’s exact interest method may change the figures slightly.

The interest-only plan has the lowest payment and the worst result. After five years you have paid $13,000 in interest and still owe the full $50,000. The five-year plan costs $731.48 more each month but saves $6,111 in interest and clears the debt.

Rates can also rise while you wait. If prime climbed another full point, the interest-only payment on the same $50,000 would go from $216.67 to $258.33 a month, with nothing coming off the balance.

Readvanceable mortgages: the room that refills

Many HELOCs are sold as part of a readvanceable mortgage, which bundles a regular mortgage with a line of credit. The FCAC found that 80% of about 3 million HELOC accounts were held this way in 2016. Most of these plans have a rebalancing feature: as you pay down the mortgage, your available credit goes up automatically.

That sounds helpful, and it can be. It also means your mortgage payments keep creating new borrowing room, so it is easy to stay in debt for longer than you planned.

HELOC vs other ways to borrow against your home

The FCAC describes four ways to borrow against your home, and they differ mainly in how you receive the money and how you pay it back. With a HELOC you pay it back and borrow again. With a home equity loan you get a one-time lump sum and repay fixed amounts on a fixed schedule. A second mortgage sits on top of your first one, so you keep paying both. A reverse mortgage is usually for people aged 55 or older and needs no regular payments.

If you need a fixed amount for a fixed purpose, a loan with a set repayment schedule forces the discipline a HELOC does not. If you already carry several debts, see how the avalanche and snowball methods compare before you move them onto your home.

Before you open a HELOC

1. Work out your ceiling. Take 80% of your home’s value, subtract your mortgage balance, and compare it with 65% of the value. The lower number is the most a federal lender can offer.
2. Get the rate as prime plus a number. Ask for the premium over prime in writing, then add your lender’s prime rate, which is 4.70% at BMO and National Bank.
3. Test a higher rate. Work out the payment at one and two points above today’s rate. Our stress test calculator shows how lenders think about rate buffers.
4. Set your own payoff date. Pick a term, such as five years, and pay the amortized amount instead of the interest-only minimum.
5. Ask what the lender can change. Confirm whether the line is part of a readvanceable mortgage, what fees apply to set it up, and when the lender can reduce the limit or demand repayment.

Frequently asked questions

• Sources, checked November 9, 2026: OSFI Guideline B-20, Residential mortgage underwriting practices and procedures; OSFI advisory on innovative real estate secured lending products under B-20; FCAC: Borrowing against home equity; FCAC: Home equity lines of credit, market trends and consumer issues; Bank of Canada: Policy interest rate; BMO prime rate announcement; National Bank prime rate announcement.
• Method: HELOC room is the lower of 65% of the home’s value and 80% of the value minus the mortgage balance, as set out by OSFI. Repayment figures use the standard loan payment formula at 5.20% a year, charged monthly, and were checked by a month-by-month schedule and a closed-form balance formula in Python.

Important: This guide is general information, not financial or legal advice. Lenders set their own approval criteria and may offer less than the maximums shown. Credit unions regulated by a province may use different limits. Gizly is not paid by any lender mentioned here. See our affiliate disclosure.