Heloc and other mortgages

5 Replies

Hi I wanted to bring up a hypothetical scenario and get reader opinions on it. Suppose a have a large heloc on my primary residence. There is no other debt on that property and the heloc has zero balance. If I want to buy a secondary home with a 20% down loan, would I have to close the heloc?

Thank you

@Rich Hupper

No, you would not have to close your HELOC to do that. Your HELOC is like a credit card. If you carry a balance, that affects your DTI. If you don't, it doesn't. When you first got the HELOC, your balance qualified your DTI based on if you maxed out that HELOC and needed to make the payments. Since you have no balance owed, there is no payment to make. You should be golden.

Originally posted by @Rich Hupper :

Hi I wanted to bring up a hypothetical scenario and get reader opinions on it. Suppose a have a large heloc on my primary residence. There is no other debt on that property and the heloc has zero balance. If I want to buy a secondary home with a 20% down loan, would I have to close the heloc?

Thank you

Some lenders have overlays requiring them to hit you with the HELOC payment in your DTI as if it were drawn to the max amount, but that's not a Fannie or Freddie guideline, so just switch lenders if you are up against that.