How (and When) to Access Home Equity With A HELOC

According to Statistics Canada figures, Canadians held approximately $6.1 trillion in home equity as of the third quarter of 2025. That is a mountain of capital available to homeowners.

No wonder so many of them look to their home’s value to cover expenses or consolidate high-interest debt. In December 2025, Canadians owed over $180 billion in active home equity lines of credit (HELOC).

Getting a HELOC became a little harder in late 2023, when the Office of the Superintendent of Financial Institutions (OSFI), Canada’s financial regulator, imposed a new rule: A HELOC credit line cannot exceed 65% of a home’s current loan-to-value (LTV). Previously, homeowners could borrow up to 80% of their home’s LTV.

So even though it’s your equity, you need to be judicious when deciding when — or why — to tap into it using a HELOC.

One of the most common ways to turn equity into cash is by taking out a home equity line of credit, or HELOC. While some Canadian banks offer lump-sum home equity loans, HELOCs tend to be more popular, says Carla Gervais, director of sales and operations and principal broker for The Mortgage Advisors in Ottawa.

However, getting a HELOC is a little harder than it used to be after the government put new rules into place in late 2023, Gervais points out.

Last year, The Office of the Superintendent of Financial Institutions (OSFI), Canada’s financial regulator, imposed a new rule: A HELOC credit line cannot exceed 65% of a home’s current loan-to-value (LTV). Previously, homeowners could borrow up to 80% of their home’s LTV.

The government adjusted its rules to ensure borrowers can better handle their debts and mitigate regulated banks’ lending risk, Richard Sklar of David Sklar & Associates, a licensed insolvency trustee firm in Ontario, wrote in a 2023 blog post about the HELOC changes.

“The Canadian housing market is vulnerable due to stubbornly high home prices and steep interest rates at the moment,” Sklar wrote. “A wave of defaults on HELOCs and mortgages could devastate the economy, which the OFSI wants to prevent.”

Best Mortgage Rates in Canada

Compare Canada’s top mortgage lenders and brokers to fine the mortgage rate that will meet your needs.

COMPARE BEST MORTGAGE RATES

An attractive benefit of HELOCs is that you can use the money however you wish. But a good rule of thumb says to borrow equity only when it can save you money or increase the value of your home over the long-term.

Common examples of this include paying off credit card debt or financing major home improvements.

No matter how you plan to use a HELOC, use the following tips to ensure you avoid a debt spiral:

Carla Gervais, director of sales and operations and principal broker for The Mortgage Advisors in Ottawa, encourages homeowners to be strategic about how and when they use it.

“You’d want to use it smartly, and you want to make sure that it’s comfortable for your budget so that you can maintain it,” she says. “You don’t want to be house-poor.”

HELOCs work a lot like a credit card, only you’re borrowing your equity instead of a lender’s money. There will be a set limit that you can spend, pay off and reuse as needed over a set time, known as the draw period. You pay interest only on the amount you withdraw, and the rate is often variable during the draw period.

Once the draw period ends, you’ll enter repayment and pay off any remaining interest and the principal balance.<br><br>In addition to the new 65% LTV limit for HELOCs, here are other borrowing guidelines you’ll need to meet to qualify:

Credit score

You’ll need a minimum credit score of 650 to get a HELOC, though this can vary by lender, Gervais says. Typically, the higher your credit score, the lower rates you’ll qualify for, too.

Debt-to-income (DTI) ratio

Your DTI ratio is a measure of how much of your gross monthly income goes toward debt payments, including your housing expenses.

For HELOCs, with a lower credit score, the max DTI is 35% for housing payments alone and up to 42% for all monthly debts. For borrowers with credit above the minimums, the max DTI ratio is 39% for just your housing payments and no more than 44% for all debts, Gervais says.

Stress test

As with mortgages, the qualifying benchmark rate for a HELOC is either 5.25% or your lender’s rate plus 2%, whichever is highest, according to the Financial Consumer Agency of Canada.

If prime rate is 4.95% and your lender's HELOC rate offer is prime plus half-a-percent, you’d be looking at a rate of 5.45%. But you'd have to qualify at 7.45%.

Employment stability

If you’re in a full-time, salaried role with guaranteed income, you don’t necessarily have to be at a company for two years; you could be there for six months and still qualify for a HELOC, Gervais says. For those who are self-employed, lenders look at average earnings over two years, she adds.