HELOC - harmful to debt to income ratio?

3 Replies

BP- I️ am opening another HELOC on a property this week and was wondering if the loan brokers out there can help me understand exactly how this is effectively counted “against” me in acquiring a new loan for the next property. - Does the entire payment count against my Debt to income ratio? Even if I️ am not using all or even part of the line? - How can I️ maintain the most favorable position for a property loan in the future but continue to utilize equity ? Thanks all!

@Tristan Rynning it will depend on the actual lender. I believe Fannie/Freddie guidelines are that only the current balance/payment is counted towards DTI, while many lenders will have more stringent guidelines that could possibly count up to the maximum payment if the line of credit is fully utilized.

@Tristan Rynning as the post above suggested this could get tricky at certain banks. Most investors seek smaller banks since they are more flexible to lend to investors. In general, your HELOC payment will be held against you if you need to draw on it to purchase the property. If the payment is $0, meaning you didn't need it to buy the property, then nothing will be held against you. Only the minimum payment is held against you and only the payment on the balance. That may not be the position of every bank though so when interviewing lenders do ask that question...and if they don't have a response right away...then go to another bank. Hope this helps!

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