How to borrow on Aave: a step-by-step guide

Borrowing on Aave works like a pawn shop run by software. You lock up crypto as collateral, borrow against it, and get it back when you repay. There is no credit check and no due date, but if the collateral loses too much value, the loan can be liquidated. The steps below are for Aave V3, the widely used version, with notes on V4.

Before you start: pick a network and a market

Aave V3 runs as separate markets on many networks, such as Ethereum, Arbitrum and Base. Each market has its own assets, rates and health factor, and collateral in one market cannot back a loan in another. Compare them on all markets.

Every step is a transaction with a network fee, and a full loan takes several. Layer 2 networks such as Arbitrum and Base usually cost far less per transaction than Ethereum mainnet.

Step 1: connect a wallet and supply collateral

The official interface is the Aave app at app.aave.com. Type the address yourself. Connect a self-custody wallet that holds your collateral.

Pick the asset under "Assets to supply", approve it (with a transaction or a free signature) and confirm the supply. You receive aTokens, such as aWETH, which earn supply interest.

On V3, the first supply of an asset that can back loans switches it on as collateral automatically. Check the collateral switch under "Your supplies". An asset with a max LTV of 0% cannot be collateral at all.

Step 2: work out how much you can borrow

Each collateral asset has two limits:

• Max LTV (loan to value): the most you can borrow against it, as a share of its value.
• Liquidation threshold: the higher share at which the loan can be liquidated.

In October 2026, WETH on Ethereum Core had a max LTV of 80.5% and a liquidation threshold of 83%. Supply 10 ETH at $3,000 and your collateral is worth $30,000, so you can borrow up to $24,150. The health factor shows how far you are from liquidation:

health factor = collateral value x liquidation threshold / debt

With a USDC loan, ignoring interest:

Borrowing the maximum leaves almost no room: a 3% dip in ETH would push the health factor below 1. The liquidation price calculator shows how much you can borrow and still survive a given price drop.

Step 3: choose what to borrow and confirm

The "Assets to borrow" list shows each asset's APY and how much you can take, limited by your collateral, the pool's spare cash and the borrow cap. Borrowing a stablecoin such as USDC keeps the debt at a fixed dollar amount, so only the collateral price moves your health factor.

Every new loan on V3 pays a variable rate, because version 3.2 removed the old stable rate in 2024. It moves with how much of the pool is lent out (see how Aave interest rates work). GHO is the exception: GHO Stewards set its rate within limits approved by governance.

Before you confirm, the app shows your health factor now and after the borrow, and asks you to accept the risk when the new health factor is low. Aave's help pages say no health factor is universally safe: it depends on how volatile your collateral is against your debt. A bigger buffer buys time to react.

Interest starts at once and the debt grows every second. At an average of 5% APY, 12,000 USDC becomes about 12,600 in a year. Try the borrow cost calculator.

Step 4: repay and withdraw

Repay any amount at any time, and each repayment raises your health factor. On V3 the app can take it:

• from your wallet, in the borrowed asset;
• from a deposit of the same asset, such as aUSDC for a USDC debt;
• from your collateral, on the larger markets, by swapping part of it into the debt asset in one transaction (a swap fee can apply).

To clear the loan, choose the maximum: a typed-in amount can leave a tiny balance as interest keeps adding up. With the debt gone, you can withdraw everything. While a loan is open, you can only withdraw as much as keeps the health factor at 1 or above.

E-Mode, isolation mode and V4

E-Mode raises the limits when collateral and debt move together, such as ETH and a staked ETH token. In October 2026 the ETH-correlated category on Ethereum Core gave WETH a max LTV of 93% and a threshold of 95%, instead of 80.5% and 83%, but you can only borrow what the category allows. See E-Mode explained.

Older guides mention isolation mode, which limited newer collateral to borrowing certain stablecoins. Aave's changelog shows that version 3.7 removed it from most V3 markets in April and May 2026. Instead, an E-Mode category can now count only the assets it lists as collateral.

On Aave V4 you supply and borrow on a spoke, only collateral on that spoke counts, and your rate is the hub's base rate plus a risk premium based on your collateral. See Aave V4 explained.

The main risks

• Liquidation. Below a health factor of 1, liquidators can repay up to half your debt, or all of it if the health factor is 0.95 or lower or the position is small, and take collateral worth that much plus a bonus (5% for WETH on Ethereum Core in October 2026). There is no warning. See how liquidations work.
• Rate spikes. When a pool is nearly fully borrowed, the rate climbs steeply and your debt grows faster.
• Rule changes. In April 2026, after an exploit involving rsETH, WETH's max LTV was cut to 0% on several markets as a precaution. Loans stayed open, but new borrowing against WETH was blocked. Most markets restored it in May 2026; on Mantle it was still 0% in October 2026.
• Smart contract and oracle risk. Audits reduce but cannot remove the risk of bugs, and the price oracles could fail. See is Aave safe?

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