Loan that doesn’t require current home equity as collateral?

Question

I’m about to buy my first investment property (rental condo) using 180k drawn from a heloc against my current home. My plan has been to search for a conventional loan, over the next few months, at a 30yr fixed rate to quickly pay back this heloc.

The two lenders that I’ve spoken two thus far both were intent on a mortgage being secured with my home (valued at around 650k and owned outright). This would certainly be the easiest arrangement but I was kinda hoping to remove this home from the equation. Is there any scenario or loan structure that I might find somewhere that will not seek to leverage my primary home, but instead this soon to be acquired condo as collateral on the loan?

Thanks

Willy Vasquez morales · Answer

Ask the lender why you can't use the subject property as the collateral. Each property should be able to be used as its own collateral. You might need 20% as not many will do 100% ltv.

Reach out to small bank or credit unions

Lenny Eckstein · Answer

@Mike McCarthy  - thanks for weighing in. That’s good info. And yes, I’m in the US.

I’m going to reapproach these lenders and clarify my intentions. In an effort to determine a full range of flexibility through this loan, I may have been a bit ambiguous in my ask.

Mike McCarthy · Answer

@Lenny Eckstein are you in the US? I’ve never heard of another property being used as collateral for a conventional mortgage.

Unless the Mortgage you are requesting is way over the 75-85% LTV of the condo, you should be able to get a mortgage just on that property. Of corse the bank will review your overall financial situation, but cross-collateralization seems like something more for a commercial/portfolio loan.