HELOC Guidance on LTV for Starting Out

9 Replies

Hi all,

About to speak with local banks/credit unions about a HELOC on my primary. 80% LTV will do but I'm wondering if I will kick myself later for not going 90%. Has anyone started out at a lower LTV only to regret it later (and missed deals because of it)? Thank you.


@Taj Hayden you will absolutely end up regretting not getting 90% LTV! I just finished up getting a HELOC on my primary. I used a HELOC on my old house to get me in the game, and I was able to acquire my four unit in Lyons, IL which has been a fantastic deal. HELOCs don't cost you money every month until you use them, so in my mind there is no reason not to have that extra buying power.

What are your goals with the HELOC? Sounds like you already have a property picked out.

Generally speaking, I would echo what John Warren said...if you can go up to 90% LTV, holding all else (relatively, at least) equal, I would go up to the 90% on the heloc. I wish that LTVs greater than 80% on HELOCs were allowed here in the state where I own my properties (Texas).

@John Warren Thanks for the input! My plan is the same (to get me in the game) although I don't have a property identified yet. Would love to hear how you went about the four in IL as eventually I plan on buying in the midwest (more likely in MO based on who I know there). There's an area of STL that I'm interested in that has duplexes listed for $73K and although I may not source the deals from the MLS those numbers aren't too bad as they appear to meet the 1% & 50% rules. I could purchase one, be cautious and wait 6 months to see what surprises pop up and then go again.

@Jordan Decuir I know of one credit union in WA that offers 100% LTV so I will call them as well. I suspect that 100% = 720 score and mine isn't there yet but I'll get the data and then that may be an option in the future. Thanks you for writing!

In my experience lenders will change terms, such as interest rates, and possibly qualification guidelines at certain thresholds as you move to higher LTV HELOC. For exampleayou may pay a higher interest rate for a 90% HELOC vs 80%.

Definitely get the highest LTV you can. You'll have more buying power with the higher limit and if you don't end up needing the extra money you don't have to use and it won't cost you anything.

@Taj Hayden my four unit is in the Chicago area. I bought it right of the MLS, and was still able to get it about 30% below market value. There are definitely still solid deals on the MLS in the Chicago market. "They take patience, but they are there!

@John Warren Good point. My wife has MLS access so I could have her set up a search based on my criteria. By the time something pops up my Heloc could be in place and I'd be able to act quickly.

@Taj Hayden excellent idea! If the wife has access, have her set it up so it refreshes as many times per day as the system allows. I get pinged six times per day for all the property types I am interested in!

@John Warren wow! didn't know that kind of refresh may be possible.  Thanks for the tip!  Gathering docs for a credit union that responded the same day I submitted my app so we'll see what happens.  I also connected with another BP member in WA as a back-up in case I don't like what the credit unions offer and we can work together on refi's for rental properties in the future.

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