HELOC basics in Canada: what a home equity line of credit is
A HELOC is revolving credit secured by your home. You can borrow, repay and borrow again up to your limit. For federally regulated lenders, the revolving (non-amortizing) HELOC portion is limited to 65% of the home's value. You must pass a stress test to get a HELOC at a bank.
- Rules verified: 2026-07-13
- Sources fetched: 2026-11-04 (FCAC HELOC page, Guideline B-20, Bank Act s.418)
- 65% revolving limit and 80% loan limit: federally regulated lenders and banks only
- Educational only — not a lender offer
What a HELOC is
A HELOC is revolving credit secured by your home. You can borrow, repay and borrow again up to your limit. (FCAC)
Your home is the collateral. If you don't repay, the lender may take possession, and you must repay the HELOC if you sell. (FCAC)
The 65% limit on the revolving portion
For federally regulated lenders, the revolving (non-amortizing) HELOC portion is limited to 65% of the home's value. (Guideline B-20; FCAC)
For federally regulated lenders, you can borrow above 65%, but the portion above 65% must be amortized (paid down on a schedule). (Guideline B-20, footnote 16)
The 80% limit and how much equity you need
For banks, a loan to buy, renovate or improve a home, or to refinance such a loan, cannot exceed 80% of the home's value (including prior mortgages) unless it is insured. FCAC says a HELOC combined with a mortgage needs 20% minimum equity. (Bank Act s.418; FCAC)
For a standalone HELOC, FCAC says you need more than 35% equity. (FCAC)
FCAC's equity example: A $500,000 home with $200,000 owing has $300,000 of equity, or 60%. (FCAC)
The mortgage stress test
You must pass a stress test to get a HELOC at a bank. (FCAC)
For federally regulated lenders, the uninsured stress test means qualifying at the greater of your contract rate plus 2% or 5.25%. B-20 covers HELOCs. (minimum qualifying rate; Guideline B-20) Our stress test calculator shows the qualifying rate for a mortgage.
Rate changes
Most HELOCs have a variable rate, and the lender may change it at any time. For federally regulated lenders, you must be notified in writing within 30 days of a change. (FCAC)
Related
Frequently asked questions
What is a HELOC?
A HELOC is revolving credit secured by your home. You can borrow, repay and borrow again up to your limit.
How much can I borrow with a HELOC?
For federally regulated lenders, the revolving (non-amortizing) HELOC portion is limited to 65% of the home's value. For federally regulated lenders, you can borrow above 65%, but the portion above 65% must be amortized (paid down on a schedule). For banks, a loan to buy, renovate or improve a home, or to refinance such a loan, cannot exceed 80% of the home's value (including prior mortgages) unless it is insured. FCAC says a HELOC combined with a mortgage needs 20% minimum equity.
How much equity do I need for a standalone HELOC?
For a standalone HELOC, FCAC says you need more than 35% equity.
Do I need to pass the mortgage stress test for a HELOC?
You must pass a stress test to get a HELOC at a bank. For federally regulated lenders, the uninsured stress test means qualifying at the greater of your contract rate plus 2% or 5.25%. B-20 covers HELOCs.
Can my HELOC rate change?
Most HELOCs have a variable rate, and the lender may change it at any time. For federally regulated lenders, you must be notified in writing within 30 days of a change.
What happens if I can't repay my HELOC or I sell my home?
Your home is the collateral. If you don't repay, the lender may take possession, and you must repay the HELOC if you sell.