Down payment financing?

[Miles Stanley]

So I've read in multiple forums that a down payment on a conventional mortgage cannot be borrowed.  To me this implies that Lines of Credit, Private Money, etc cannot be used for the down payment the bank is expecting.  The bank want your cold hard cash...fine.

Yet, i have heard people talk about using lines of credit/HELOC's to cover their down payment. In fact i think this was one of the examples used in the book Investing in RE with no/low $$$.  

So whats the deal? Does LOC money not count as borrowed funds?

I know you can use a LOC to purchase a property outright, but thats not what I'm referring to here.

[Jared Bouzek]

@Miles Stanley The LOC must be secured by a property. Funds from an unsecured line would not be acceptable. I believe the logic from Fannie Mae is that funds from a secured line on a property is return of your equity to you. Funds from an unsecured line is simply debt.