HELOC problems- banks won't loan because construction has already begun

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HELOC problems- banks won't loan because construction has already begun

Julia Newman
New to Real Estate · DFW · Member since 2025 · 9 posts · 7 votes

Well, I'm in a bind. We are doing construction on a newly inherited home and I had hoped to take out a HELOC for some of the cost. It took a while to get the title in my name after my father's passing and we began renovation and have moved out.

I thought I had done my research. But I'm now finding out that many banks won't issue the HELOC if the home is already under construction. I went to Comerica last week and they were ok with the contruction part, but not ok with it being vacant. So, I'm worried I won't find any banks that will give me the loan.

My credit is excellent. The home is completely paid off and valued at 550K. It is still listed as our primary residence, but we are not living there during construction. The kitchen is torn out, electric on a generator, etc.

What can I do- any banks who will still loan on that? A drive by appraisal will clearly show it is under construction and if they look in the windows they will see it is vacant.

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  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    11mo
    Quote from @Julia Newman:

    Well, I'm in a bind. We are doing construction on a newly inherited home and I had hoped to take out a HELOC for some of the cost. It took a while to get the title in my name after my father's passing and we began renovation and have moved out.

    I thought I had done my research. But I'm now finding out that many banks won't issue the HELOC if the home is already under construction. I went to Comerica last week and they were ok with the contruction part, but not ok with it being vacant. So, I'm worried I won't find any banks that will give me the loan.

    My credit is excellent. The home is completely paid off and valued at 550K. It is still listed as our primary residence, but we are not living there during construction. The kitchen is torn out, electric on a generator, etc.

    What can I do- any banks who will still loan on that? A drive by appraisal will clearly show it is under construction and if they look in the windows they will see it is vacant.


     Once you start the process it becomes much harder for a multiple of reasons. Are you using a GC for the job or are you doing it your self?  You say the property is worth 550k. Is that today?  or, after the repair is complete? is it your intent that this will be your primary home once the rehad is complete? 

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  • Julia Newman
    OP
    New to Real Estate · DFW · Member since 2025 · 9 posts · 7 votes
    11mo

    We are using a licensed GC

    It is currently worth 550K. ARV is $950K
    It will be our primary residence after renovation

    0Reply
    • Jay HurstBusiness Member
      Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
      11mo
      Quote from @Julia Newman:

      We are using a licensed GC

      It is currently worth 550K. ARV is $950K
      It will be our primary residence after renovation


       Dallas based and happy to talk. Send me a DM if interested. 

      Hurst Real Estate, INC4.987 Reviews
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    11mo
    Quote from @Julia Newman:

    Well, I'm in a bind. We are doing construction on a newly inherited home and I had hoped to take out a HELOC for some of the cost. It took a while to get the title in my name after my father's passing and we began renovation and have moved out.

    I thought I had done my research. But I'm now finding out that many banks won't issue the HELOC if the home is already under construction. I went to Comerica last week and they were ok with the contruction part, but not ok with it being vacant. So, I'm worried I won't find any banks that will give me the loan.

    My credit is excellent. The home is completely paid off and valued at 550K. It is still listed as our primary residence, but we are not living there during construction. The kitchen is torn out, electric on a generator, etc.

    What can I do- any banks who will still loan on that? A drive by appraisal will clearly show it is under construction and if they look in the windows they will see it is vacant.


     we have given people construction bridge loans when this occurred, but it has to be signed as a non-owner occupied and you do not intend on occupying when complete. 

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  • Kate Nixon Taylor
    Lender · Cary, NC · Member since 2021 · 122 posts · 29 votes
    11mo

    Hi Julia, I have lenders that will not do an appraisal and they will pull the value from online. We just need to get it submitted. Feel free to reach out anytime. 

    0Reply
  • Andy Gonzales
    Residential Real Estate Broker · Poway, CA · Member since 2017 · 73 posts · 23 votes
    11mo

    I understand your frustration—having excellent credit, a fully paid-off home valued at $550K, and still facing hurdles in securing a HELOC for your under-construction, vacant property is undoubtedly challenging. Many lenders have policies that exclude homes under renovation or those that are vacant, making it difficult to access traditional HELOCs

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