Rental Property Investor · Denver CO / Tucson, AZ · Member since 2017 · 17 posts · 8 votes
Hi BP I currently own a triplex in Tucson AZ where I live in one of the units. The other two are currently leased out for the 2017/2018 and I have 25% equity in the property. My question is can I take out a HELOC on the equity I have? I've been told that my property is treated as an investment property because it's a triplex, but it is my primary residence. I've read that with a single family house it's possible to get a HELOC up to 85%LTV. What are the HELOC limits and rules for an investment property and would someone in my situation be able to get a HELOC up to that 85%LTV? Thanks.
Investor · United States · Member since 2015 · 415 posts · 487 votes
9y
Since HELOCs are just held in-house at the bank (they're not sold on the secondary market like first mortgages are), the rules really just depend on which bank you're working with. The most aggressive lender I could find in my city would go up to 80% LTV on investment properties, but I have never asked them about owner-occupied multi-units.
Take the 2-3 hours required to call every single credit union or bank in your area. It's tedious, but since every bank is different with HELOCs it's the only way to find out who has the best deal.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Clayton Jeanette every lender is different. So what one lender may not do, another will. You just have to create a list of lenders then go down the line until you get a yes!! With respect to the equity, If you have 25% equity in the property you may be able to pull out some money depending on what the lenders LTV guidelines are. I know that TD Bank and Capital One will do up to 90% LTV. Well at least that was a year ago. Best of luck to you. Always remember to persist and you will WIN!!!
Rental Property Investor · Denver CO / Tucson, AZ · Member since 2017 · 17 posts · 8 votes
9y
Thank you all it sounds like all the guidlines really depend on what the lender is willing to do since its not sold on a secondary market. Now I just need to find a bank wanting to give me a HELOC at the LTV I'm looking for. It looks like I will be making some calls when the banks open monday morning. Thanks for pointing me in the right direction BP.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
Hey @Clayton Jeanette, I'd shop around, there are very widely varying terms in HELOCs since they are usually held in house by banks. My credit union does 95%LTV with no closing costs and desktop appraisals.
Rental Property Investor · Blue Bell, PA · Member since 2018 · 93 posts · 12 votes
7y
Hi everyone! I’m in a similar situation where I am planning to buy a triplex or fourplex as my primary residence. I want to buy it with a conventional loan with 25% down and then take out a heloc that will allow me to go up to 90 cLTV.
Has anyone found a bank or credit union that offers high HELOCS with high LTVS?
Hey @Clayton Jeanette, I'd shop around, there are very widely varying terms in HELOCs since they are usually held in house by banks. My credit union does 95%LTV with no closing costs and desktop appraisals.
Hi everyone! I’m in a similar situation where I am planning to buy a triplex or fourplex as my primary residence. I want to buy it with a conventional loan with 25% down and then take out a heloc that will allow me to go up to 90 cLTV.
Has anyone found a bank or credit union that offers high HELOCS with high LTVS?
Rental Property Investor · Blue Bell, PA · Member since 2018 · 93 posts · 12 votes
3y
Hi! Pretty well. I worked out the HELOC in 2020 with state department federal credit union. I did an extensive search and found them to be among the only to offer a 95% cLTV at that time.
Hi! Pretty well. I worked out the HELOC in 2020 with state department federal credit union. I did an extensive search and found them to be among the only to offer a 95% cLTV at that time.
Awesome! And you did end up buying a 3-4 family?
appreciate this info. I’ll be giving them a call to see what their most up to date requirements are. Have a 3 family primary in NJ
Rental Property Investor · Blue Bell, PA · Member since 2018 · 93 posts · 12 votes
3y
Yes, I bought a fourplex in 2019 in Philly with an FHA mortgage (3.5% down). I got lucky and was able to refinance in 2020 with a conventional loan and completely remove any mortgage insurance because prices had risen and my appraisal was very high. All this was easier too because I was an owner occupant of one unit and rented the other 3. I also set up the HELOC on this fourplex with SDFCU in 2020 and was able to get a $175K line of credit. All the stars aligned!!!
Yes, I bought a fourplex in 2019 in Philly with an FHA mortgage (3.5% down). I got lucky and was able to refinance in 2020 with a conventional loan and completely remove any mortgage insurance because prices had risen and my appraisal was very high. All this was easier too because I was an owner occupant of one unit and rented the other 3. I also set up the HELOC on this fourplex with SDFCU in 2020 and was able to get a $175K line of credit. All the stars aligned!!!
Very similar situation here! I sent you a connection with a quick question regarding the lender recommendation. Thank you so much for the speedy response. Look forward to hearing from you!
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
3y
as Update to this post from 6 years ago, there are heloc's on owner occupied 2-4 unit properties up to 89.90% CLTV or combined loan to values (meaning multiple loans but all together not exceeding 90% of the value).
Terms typically are
interest only first 10 years and drawable from the line
years 11-30 its Principal and interest payment
Prime index/rate + margin (this portion is fixed but prime is not)
underwriting is done assume prime + margin + 2% stress test for underwriting meaning if your prime + margin was 10% then your underwriting rate used to determine your maximum line you can qualify for would be 12% rate as an example based on principal and interest payment over 30 years or 360 months
Income is the main determinant of your qualification and fico min 680+ is just the min score to get through the "front door,"
Maximum DTI or debt to income allowed is 45% DTI
Maximum lines on this product go from 500-750k so you can get a decent line size that can actually buy other BRRR's or fix flips and deals. Some credit unions or banks offer higher LTV's but the maximum LTV's seem to be limited when you're going to higher LTV's like 90-100% so pros and cons.
Maximum 10 total properties (not 10 financed properties like fannie/freddie 1-4 unit properties, so even if the properties are free and clear it counts against this 10 "properties," whether there is debt/liens against them or not)
You can use 1 year tax returns for self employment and 1 year tax returns for rental property income calculations as well which is huge for BP folks since most of us are rental property investors and self employed/S-corp/schedule C personal tax returns
as Update to this post from 6 years ago, there are heloc's on owner occupied 2-4 unit properties up to 89.90% CLTV or combined loan to values (meaning multiple loans but all together not exceeding 90% of the value).
Terms typically are
interest only first 10 years and drawable from the line
years 11-30 its Principal and interest payment
Prime index/rate + margin (this portion is fixed but prime is not)
underwriting is done assume prime + margin + 2% stress test for underwriting meaning if your prime + margin was 10% then your underwriting rate used to determine your maximum line you can qualify for would be 12% rate as an example based on principal and interest payment over 30 years or 360 months
Income is the main determinant of your qualification and fico min 680+ is just the min score to get through the "front door,"
Maximum DTI or debt to income allowed is 45% DTI
Maximum lines on this product go from 500-750k so you can get a decent line size that can actually buy other BRRR's or fix flips and deals. Some credit unions or banks offer higher LTV's but the maximum LTV's seem to be limited when you're going to higher LTV's like 90-100% so pros and cons.
Maximum 10 total properties (not 10 financed properties like fannie/freddie 1-4 unit properties, so even if the properties are free and clear it counts against this 10 "properties," whether there is debt/liens against them or not)
You can use 1 year tax returns for self employment and 1 year tax returns for rental property income calculations as well which is huge for BP folks since most of us are rental property investors and self employed/S-corp/schedule C personal tax returns
Hey Albert, thanks for the response here. What lenders offer those terms. To your point of higher CLTV lenders capping max lines at 300k. Which makes the higher CLTV irrelevant to me.
any lender recommendations would be greatly appreciated. Thanks’