Can you use a heloc for a mortgage?

8 Replies

Hi, I was wondering if someone could give insight into my situation. We own two homes - one we rent and the other we live in. We would like to move out of the current house we live in, rent it out and buy another home to live in (need more space and looking at another location). However we do not want to sell our current home as it is in a high appreciation area. Can we use our equity in these homes as downpayment for the next? Also my husband said that we need to show a rental history for one year before we are able to buy another place - is that true? Any way around this? Thanks, Sheeva

Hi Sheeva! Is your house paid off? If so, you should be able to get a HELOC which you can use towards whatever you like. :) If not paid off, I'd suggest working with a small lender like a local bank or credit union. I think they will lend to you based on equity already paid against your mortgage.

@Sheeva R. I paid cash for a rental from the heloc amount out of my primary residence. You don’t need to own it free n clear, but you need to have decent equity.
As long as you have the down payment amount + reserves, I don’t see why you can’t purchase another property. Banks also look at your debt to income ratio- so check with the lender to see you’re not exceeding that. Banks usually need 2 yrs of rental history to consider the rental amount as your income. But that doesn’t mean they won’t let you have a mortgage to buy a rental.

So we have owned the 1st rental property for about 5 years - it has gone up about 200k since purchase. That is rented.

The second property we live in we bought a year ago (April 2017) so not too much equity. It’s price has gone up quite a bit too since it’s in a high appreciation area. I don’t like the house at all and we will need to move but the problem is I want to avoid selling it.

Given the details of the situation any way we can do that- move without having to come up with a huge downpayment in cash. The property I am thinking of is around 700-750k

Hi Sheeva,

I am a mortgage and real estate broker out of LA. If you’d like, I can take a look over your case and give my advice. We work with a number of people who have interesting financial situations and can usually find something to work it out. Feel free to PM me and we can talk. Happy to help even if you don’t use my brokerage going forward.