Rental Property Investor · Southern California · Member since 2023 · 39 posts · 11 votes
Hey everyone,
I'm diving into real estate investing and considering tapping into my home equity via a HELOC to fund the down payment for my first rental property. I'm wondering if anyone has experience with this – do I need to use the same lender for both the HELOC and mortgage application? Any insights or advice on navigating this process would be greatly appreciated!
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
2y
@Nixon C. you certainly don't HAVE to use the same lender for both products but you can if you wanted to. I would recommend asking your realtor who they would use for a lender when purchasing an investment property. And then ask that lender if they write both products. I want you to work with someone that is referred first. It may not be foolproof but it should help with getting to someone good a little sooner.
Rental Property Investor · Pittsburgh, PA · Member since 2020 · 14 posts · 21 votes
2y
I think it depends on the lender. You may find one that allows you have a mortgage with them, and give you a HELOC to use as the down payment. More than likely would be a commercial lender.
Going the conventional route you'd most likely have to setup the HELOC in advance, and transfer the money to your checking account and let it sit in there for a few months to show up on enough bank statements that the lender will require. Since they source the funds a few months leading up to the transaction. Then you'd still need the DTI to work with that HELOC balance already withdrawn.
That's just my thought, i'm sure someone who works in the lending industry can give you more guidance. Either way i'd make sure your confident in your numbers, since the HELOC will come with a higher interest rate as a second monthly mortgage payments.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
2y
@Nixon C. you certainly don't HAVE to use the same lender for both products but you can if you wanted to. I would recommend asking your realtor who they would use for a lender when purchasing an investment property. And then ask that lender if they write both products. I want you to work with someone that is referred first. It may not be foolproof but it should help with getting to someone good a little sooner.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
2y
Find the best HELOC with low fixed rate. You do not have to draw on it and wait. The maximum payment/rate will be used in your debt to income ratio. @Logan Koch
Adjustable rate HELOCS are generally prime+ 2 owner occupied if your FICO is 721. MAXIMUM rate 22% (fixed will be in the 7-8 range).