Home Equity Line of Credit: How to Fund Your Next Home Project

Thinking about finally updating your kitchen, building an addition, or tackling other improvements, but not sure how to pay for it?
A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home, providing flexible access to funds for renovations, repairs, or even consolidating debt.
In this guide, you’ll learn exactly how a HELOC works, what it takes to qualify, and how borrowers in Lehi, Utah and surrounding areas can leverage this tool to finance their next big project.

Quick Answers

• What is a HELOC? A Home Equity Line of Credit is a revolving line of credit secured by your home’s equity, similar to a credit card with lower rates.
• How do you access funds? You can draw funds as needed during the “draw period” up to your approved credit limit, usually using checks or an online transfer.
• What are the repayment terms? During the draw period, you often make interest-only payments; after that, the repayment period begins and you make principal and interest payments.
• Can you use a HELOC for anything? Yes, but many people use them for home renovations, education expenses, debt consolidation, or as an emergency fund.
• What’s the catch? Your home is used as collateral, so defaulting could put your property at risk. Rates can also be variable and may change over time.

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

A Home Equity Line of Credit (HELOC) is a second mortgage that lets you borrow against the equity you’ve built in your house. Unlike a traditional loan, it works more like a credit card—your lender gives you a maximum limit you can draw from and you only pay interest on the amount you actually use. For homeowners in Lehi, Salt Lake City, Provo, and Park City, HELOCs are a common way to access funds for large expenses while maintaining flexibility.

How Does a HELOC Work?

• Draw Period: This is the initial phase (often 5-10 years) when you can access money as needed, up to your limit. Payments during this period are often interest-only.
• Repayment Period: After the draw period ends, you must start repaying both principal and interest, usually over 10-20 years. No new withdrawals are allowed after the draw period.
• Variable Rates: Most HELOCs feature variable interest rates that can change as market rates change. Some lenders may offer a fixed-rate option for all or part of your balance.

This structure can make HELOCs ideal for projects that unfold over time, like a kitchen remodel or landscaping upgrades.

HELOC Qualifications: What Lenders Look For

Each lender sets its own criteria, but most will look at:

• Equity in Your Home: You typically need to have enough equity—your home’s current value minus what you owe on your mortgage. Many lenders set a maximum combined loan-to-value (CLTV) ratio, which can vary based on your credit profile, property type, and location. Local property values in Utah County, Salt Lake County, and Summit County can also play a role.
• Credit Score: Most lenders require a minimum credit score, but requirements vary. The higher your score, the more favorable your options may be.
• Income and Debt: Your ability to repay will be reviewed, often using debt-to-income (DTI) calculations.
• Property Type: Primary residences, second homes, and investment properties can all be eligible, but requirements may differ, especially for non-owner-occupied properties.

As always, specific eligibility and product guidelines change over time—connect with a licensed advisor to confirm your current options.

How Much Can You Borrow with a HELOC?

Your credit limit is determined by your home equity, property value, outstanding mortgage balance, and other factors. Lenders commonly set a maximum percentage for the combined amount of your existing mortgage(s) and HELOC relative to your home’s current market value (the combined loan-to-value ratio).

If you’re looking for more than a HELOC allows or have a unique income situation, there are other home loan options to consider as well.

Using a HELOC for Home Projects: Common Scenarios

Here are a few situations where a HELOC might fit:

• Kitchen or Bathroom Remodel: Fund upgrades in phases as your project progresses.
• Home Addition: Withdraw funds for each stage—planning, permits, construction, and finishing touches.
• Landscaping or Outdoor Improvements: Spread costs out over seasons or years, only borrowing what you need.
• Energy Efficiency Upgrades: Replace windows, update HVAC, or go solar as your budget allows.

A HELOC offers flexibility, especially if you’re waiting for contractor bids, planning work in phases, or unsure of your final budget.

HELOC vs. Other Financing Options

Understanding the difference helps you choose the best fit. Explore more about HELOCs and home equity options here.

What Can You Use a HELOC For?

While many use a HELOC for remodeling, you’re not limited to just home improvement projects. Common uses include:

• Major repairs or upgrades
• Debt consolidation
• Education or medical expenses
• Funding a business venture (if allowed)
• Preparing a property for sale or rental

It’s important to use the funds wisely—a HELOC leverages your home’s value, so informed financial planning is key.

How to Apply for a HELOC in Utah

At Zach Eastman (NMLS# 314581), we help homeowners throughout Lehi, Salt Lake City, Provo, and Park City navigate HELOC options with a focus on clear steps and local expertise. The typical process involves:

1. Checking Your Equity: Order a home value estimate to determine how much equity you’ve built.
2. Assessing Your Finances: Gather documentation on your income, current mortgage, debts, and any recent credit events.
3. Applying: Submit a formal application with your lender—some initial documentation is required.
4. Reviewing and Approval: The lender will evaluate your application, order an appraisal (if needed), and issue a decision.
5. Accessing Funds: Once approved and closed, you can begin drawing funds up to your credit limit, using them for your chosen projects.

Timelines can vary, but most homeowners see the process move from application to funding in a few weeks, depending on documentation and appraisal needs.

Important Things to Consider Before Opening a HELOC

• Variable Interest Rates: HELOCs typically have rates that can change, impacting your future payments.
• Your Repayment Obligations: Know when and how your payments will adjust—from interest-only to full principal plus interest.
• Fees and Costs: Some lenders charge annual fees, origination fees, or appraisal costs. Ask upfront what costs may apply.
• Equity at Risk: As your home is collateral, failing to repay could put your property at risk. Only borrow what you can comfortably repay.

Should You Use a HELOC or a Different Loan?

A HELOC can be a smart way to access funds for ongoing projects, but depending on your scenario, a low down payment purchase option, cash-out refinance, or personal loan might be a better fit. If you’re self-employed or have non-traditional income, flexible solutions like our Bank Statement Program may also be available.

Next Steps: Talk With a Local Mortgage Expert

Whether you’re getting started with your first HELOC or comparing funding options for your next project, let’s review your goals together. Call, text, or email me for a no-pressure conversation—we’ll look at your scenario, compare options, and chart out a pre-approval plan if needed. It’s the best way to feel confident before you begin your project—and to understand how a HELOC fits into your overall financial picture.

Frequently Asked Questions

This is educational and not financial advice. Loan programs and guidelines can change. Talk with a licensed mortgage professional about your specific scenario.

About the Author

Zach Eastman

Lending Manager at Zenlo Lending LLC · NMLS #314581

The founder, and CEO of Zenlo Lending’s mortgage team, where he blends the spirit of a teacher with the precision of a financial analyst. With a passion for helping others, Zach approaches each client’s journey as an opportunity for growth and enlightenment.

Specializes in: Conventional loans, FHA loans, VA loans

Licensed in: CO, ID, TX, UT

→ Contact → 801-770-6828 → Verify NMLS license