HELOC Debt Just Hit a New High: What Every Canadian Homeowner Needs to Know About the 65% Rule

Home equity lines of credit — HELOCs — are one of the largest and fastest-growing pools of household debt in Canada. Canadians held $230.9 billion in outstanding HELOC balances by the end of 2025, according to CMHC data citing Equifax figures, up from $219.4 billion a year earlier.

For a homeowner considering a HELOC, or already carrying one, the single most important number to understand isn't the interest rate. It's the 65% rule: a federal regulation that determines exactly how much can actually be borrowed against a home, and why.

Why it matters

A HELOC isn't like a personal line of credit. It's secured by a home, which means the collateral at risk isn't just a credit score — it's the roof over the borrower's head. That's exactly why federal regulators cap how much of a home's value can be tied up in this kind of revolving, interest-only debt.

Understanding the cap matters for two reasons: first, it reveals the real maximum that can be borrowed, which is often lower than homeowners assume. Second, it explains why HELOC balances behave differently than a typical mortgage — unlike a mortgage, a HELOC doesn't have to be paid down on any particular schedule, which is part of why balances have been climbing.

What a HELOC is, and how it differs from a standard line of credit

A HELOC is a revolving line of credit secured against the equity in a home — the difference between what the home is worth and what's still owed on the mortgage. Because it's secured by real property, HELOCs typically carry lower interest rates than unsecured personal lines of credit. As of late 2026, with prime at 4.45%, HELOC rates generally run somewhere in the range of prime plus 0% to prime plus 1% — roughly 4.45% to 5.45%, always confirmed with the specific lender at the time of application.

The tradeoff for that lower rate is risk: default on an unsecured line of credit and a credit score takes a hit. Default on a HELOC, and because it's secured against the home, foreclosure is a real possibility.

The 65% rule, explained

The Office of the Superintendent of Financial Institutions (OSFI) — the federal regulator overseeing bank lending practices — sets the underwriting rules for HELOCs at federally regulated lenders through Guideline B-20. Two limits matter:

1. The standalone HELOC cap: 65% of a home's appraised value. A HELOC on its own, from a federally regulated lender, cannot exceed 65% of what the home is appraised at.
2. The combined cap: 80% of a home's value. With both a mortgage and a HELOC on the same property (a "combined loan plan," sometimes called a readvanceable mortgage), the two together can't exceed 80% of the home's value.

Critically, OSFI requires that any portion of that combined borrowing above the 65% threshold be structured as amortizing — paid down on a schedule, like a regular mortgage — and non-revolving, meaning it can't be redrawn once it's paid off. This rule tightened in a meaningful way effective November 1, 2023, bringing what had previously functioned closer to an 80% readvanceable limit down to 65% for the revolving portion specifically.

A worked example

Take a home appraised at $600,000.

Now suppose that homeowner has a $300,000 mortgage remaining. The combined limit of $480,000 leaves $180,000 of room before hitting the 80% ceiling — and since $180,000 is well under the standalone $390,000 HELOC cap, the combined 80% limit is what actually binds here, not the 65% standalone figure. In this case, the homeowner could access up to $180,000 through a HELOC. The exact math varies by how a specific lender structures its combined loan plan, so confirming the real available amount directly with the lender is always worth doing rather than relying on a simplified formula — but the two governing numbers hold regardless of lender-specific structuring: a standalone HELOC cannot exceed 65% of appraised value, and total secured borrowing against the home cannot exceed 80%.

Why HELOC debt has been climbing

A few forces are showing up together in the data. Home values in much of the country remain elevated, which increases the equity available to borrow against. At the same time, cost-of-living pressure has pushed some homeowners to tap that equity to cover regular expenses rather than one-time projects — a shift mortgage brokers and consumer advocates have flagged away from HELOCs' traditional use for renovations or major purchases.

It's worth being precise about which HELOC statistic is being cited, since two different, non-comparable data series circulate: CMHC's report (citing Equifax consumer-tradeline data) puts outstanding HELOC balances at $230.9 billion for Q4 2025. A separate Statistics Canada aggregate measure, drawn from national balance-sheet data rather than consumer credit files, reports a different total for a different reference period. These two series measure HELOC debt differently and don't reconcile with each other — this article uses the CMHC/Equifax figure, cited explicitly.

The interest-only risk, specific to HELOCs

Like a standard line of credit, most HELOCs allow interest-only minimum payments. The difference is what's backing the debt. Carrying an interest-only HELOC balance indefinitely means the collateral — the home — remains encumbered by that debt for as long as the balance exists, with no built-in mechanism forcing it down, unless the borrower voluntarily pays more than the minimum or the balance crosses into the amortizing portion above the 65% loan-to-value threshold.

Common mistakes

• Assuming a HELOC alone can reach 80% of a home's value. The 80% figure is the combined cap with a mortgage — the HELOC-only cap is 65%.
• Treating a HELOC like a savings account or emergency fund substitute for routine expenses. Using home equity to cover ongoing cost-of-living gaps, rather than planned projects, is a pattern several sources flag as a growing area of risk.
• Not distinguishing HELOC statistics sources. CMHC/Equifax and StatsCan aggregate figures aren't interchangeable and shouldn't be cited together as if they measure the same thing.
• Using a HELOC to leverage investments assuming "rates are low." This carries real risk — interest-only payments during a draw period, exposure to variable-rate increases, and amplified losses if the investment underperforms. This is a decision that warrants a conversation with a licensed financial professional.
• Forgetting the 65%/80% caps apply at the federally regulated bank level. Provincially regulated lenders, such as some credit unions, may operate under different rules — always confirm which framework applies to a specific lender.

Sources

• OSFI, "Clarification on the Treatment of Innovative Real Estate Secured Lending Products under Guideline B-20"
• OSFI, Guideline B-20: Residential Mortgage Underwriting Practices and Procedures
• Bank of Canada, policy interest rate

This article is for general educational purposes and does not constitute financial, legal, or investment advice. HELOC availability, rates, and lender-specific structuring vary and change regularly. Speak with a qualified financial professional and a specific lender before making borrowing decisions secured against a home.

What to do next

Confirming a home's current appraised value and running it against both the 65% standalone and 80% combined caps is the fastest way to know the realistic HELOC room before contacting a lender. For how a HELOC's interest-only minimum payment compares to a standard line of credit's, see How a Line of Credit Actually Works in Canada. For how lenders are required to seek consent before raising a credit limit, see Your Rights When a Bank Raises Your Line of Credit Limit.