Investor · Cape Coral, FL · Member since 2011 · 8 posts · 1 vote
Looking to build a rental portfolio. I have my primary home with about $235,000 worth of equity. My plan/idea was to open a HELOC and start using the funds to purchase duplexes, triplexes, etc and put 20% down using the HELOC funds.
Right now my current DTI is 37%. Credit score is 780.
My questions is should I take the max $150,000(or what ever they approve me for) HELOC or will that hurt me when I need to qualify for the conventional loan to purchase these investment properties? I currently have 10+ years of rental history on my tax returns to show the lenders and I know that should help.
Will a lender count the full $150,000 against my DTI if I only used $50,000 of the line? I would love to have the $150,000, I figure that could put me into 3-5 properties in the next couple years.
I would love to hear some opinions and suggestions. Thank you
Investor · Toronto, Ontario · Member since 2017 · 54 posts · 18 votes
9y
I would think that having a HELOC available is similar to having a credit card with no balance: you're only affected by the portion of the credit you're using.
I have a ULOC that I recently went from $15k/50k to 45k/50k. When the balance was $15k my credit score was 728. The month following the extra 30k my score dropped to 708 and the following month down to 703.
There's a book called "Perfect Credit, that goes into this in nice detail.