Using HELOC as down pmt

[Julie Walker]

Are there any rules against using a HELOC as a downpayment for a conventional, Non FHA loan? Or would it be better to use the HELOC as money in the game for a private lender or hard money lender and then refi with a traditional loan? This would be the first property. Thanks.

[Jon S.]

Julie,

Typically you can utilize a HELOC, but you will need to source and season those funds. The payment would also be included in your DTI calculation, so you would need to make sure it still qualifies. Different programs require different qualification hurdles.

I don't know all of the details of your situation, but if you are buying a rental that needs renovation it is typically better to use a private or hard money lender and then refinance.  Using this method you are using capital from the lender in lieu of locking up your own or dipping into equity from your primary.