HELOC on a rental property

5 Replies

You should be able to find one willing to. I’d expect a higher interest rate. They also won’t go as high a percentage of equity. I think owner occupied 90 or even 95% isn’t unheard of but I’d bet 70 to 75% would be the max in an investment property.

Yes, it’s less common for banks to do them on rental properties but some will. (I have a couple on different properties.) 

The best thing to do is call around and find a lender in the area where you’re at that will work for you. Here some questions you can ask when calling around:

What You Need to Know When Shopping for a HELOC

I have yet to find one, but always looking... Consider that a HELOC is a second position mortgage and therefore far less secure than a first position; and human nature is such that if you were to get into financial trouble you would certainly let an investment property go before you would let your primary residence go so that makes it even less secure for the lender to put a HELOC on an investment property. Now if you own it free and clear, that is different... Many banks will do that in 1st position up to a certain LTV.

A cash-out refinance may work too depending on what you want to do. I think most lenders will do this on an investment property as long as you have enough equity. Closing costs will be higher than HELOC and also you will end up with current interest rates which may or may not be a good thing.