What is the maximum HELOC limit in Canada?

OSFI's B-20 guideline caps a standalone HELOC at 65% of your home's appraised value. If you have a mortgage combined with a HELOC (re-advanceable mortgage), your total borrowing cannot exceed 80% of the home's value.

Is HELOC interest tax-deductible in Canada?

HELOC interest is tax-deductible only if the borrowed money is used to earn income — investing in stocks, bonds, a rental property, or a business. Interest on a HELOC used for personal spending is not deductible.

What is a typical HELOC interest rate in Canada?

HELOCs in Canada are almost always variable-rate, priced at Prime Rate plus a spread (typically Prime + 0.5% to Prime + 1.0%). As of mid-2026, the Bank of Canada Prime Rate is approximately 4.95%, making typical HELOC rates 5.45%–5.95%.

Can a bank freeze or reduce my HELOC?

Yes — lenders can freeze, reduce, or cancel a HELOC if your home value drops significantly, your credit score declines, you miss payments, or you experience a change in income. The lender isn't required to give extended notice.

·· Real Estate · Borrowing

HELOC Canada: Complete 2026 Guide

A Home Equity Line of Credit can be one of the cheapest ways to borrow in Canada — if you understand its limits and risks.

Updated June 2026 · 7 min read · Source: OSFI B-20, Bank of Canada

What Is a HELOC?

A HELOC is a revolving credit line secured against the equity in your home. Unlike a mortgage, you borrow what you need, repay it, then borrow again — similar to a credit card but with dramatically lower interest rates and your home as collateral.

65% LTV Max

OSFI cap on standalone HELOC (max 80% combined with mortgage)

Prime + ~0.5%

Typical variable rate (moves with Bank of Canada)

Revolving

Borrow, repay, borrow again — like a credit line on your home

The OSFI B-20 Limits

Example: $800,000 home

Appraised home value $800,000

Maximum HELOC (65% LTV) $520,000

If you have a $400,000 mortgage HELOC capped at $240,000 (80% total − mortgage)

As mortgage balance drops to $350,000 HELOC limit grows to $290,000

When Is HELOC Interest Tax-Deductible?

✓ Deductible

• Invest in stocks, ETFs, or bonds

• Buy a rental property

• Fund a business you own

• Buy a second property for rental income

✗ Not Deductible

• Home renovations you live in

• Vehicle purchase

• Vacation or personal travel

• TFSA/RRSP contributions

The CRA looks at how borrowed money is actually used, not what account it passes through. Mixing HELOC funds in one account destroys deductibility.

Risks Most Borrowers Underestimate

⚠

Your home is the collateral

Unlike a credit card, defaulting on a HELOC can result in the lender forcing the sale of your home. Never borrow more than you can reliably repay even if your income drops.

⚠

The rate isn't fixed

HELOCs are variable rate. When the Bank of Canada raised rates in 2022–2023, HELOC rates jumped from ~3% to ~7% within 18 months — minimum payments nearly doubled.

⚠

Lenders can freeze the line

If your home value drops, your credit deteriorates, or your income changes, the lender can reduce or freeze your HELOC with little notice.

⚠

Interest-only trap

Most HELOCs allow interest-only payments. If you're paying only interest, your balance never drops. You need a plan to pay down principal.

🏠 Calculate Your HELOC Limit

Enter your home value, mortgage balance, and see your maximum HELOC room, monthly interest at current rates, and total cost over your draw period.

Open HELOC Calculator →

Frequently Asked Questions

What is the maximum HELOC in Canada?

65% of appraised home value for a standalone HELOC. Combined with a mortgage, total borrowing is capped at 80% of home value.

Is HELOC interest tax-deductible?

Only if you use the funds to earn income (investing, rental property, business). Personal use is not deductible.

Can the bank cancel my HELOC?

Yes — lenders can freeze, reduce, or cancel a HELOC if your home value drops, your credit declines, or your income changes.

📖 Related Guides & Tools

🏦 Mortgage Stress Test 🏘️ Rental Property ROI 🏠 HELOC Calculator 🏠 Mortgage Calculator