HELOC on investment property? Can it be done?

17 Replies

I am looking around for a lender that will do a HELOC on my investment property but coming up short. The banks i've called so far either does not offer the product of can't do it on investment property. Does anyone have any suggestions? My SFH is currently rented and free of mortgage cash flowing 3k/month before taxes. Im looking to get a HELOC to do some repairs to the home and use portion for down payment on new property. PLEASE HELP BP!

Hey, @Ronald Mejia . I have found lenders willing to do a HELOC on an investment property. I try to call 2x lenders a week and ask them specifically what types of loans they'd do with and without an LLC. No two have the same policy. I've assembled a nice list that I can put into a spreadsheet to analyze the terms of each and what they offer. It takes time, but is worth the effort.

Also, does it need to be a HELOC that you're happy with? Plenty of other loan types out there, obviously.

You can DM for a lead, but I don't know if they will lend in your state (my property is in Michigan).

@Brian Kantor I'm open to other options. I was saying HELOC because that's the loan product I'm most familiar with for this situation. My goal is to do repairs on the home (driveway, landscaping, minor repairs after tenant moves) & use some of those funds to purchase another investment property. What do you suggest?

To my understanding , bank of america will only do HELOC for primary residence but other smaller /private lenders will allow you to do a HELOC on investment property. Have you tried to reach out to your current mortgage lender and see if they can do that for you? If they're unable, I would ask for any referral to ones that will be able to do that for you.

Good luck! 

Originally posted by @Ronald Mejia :

@Brian Kantor I'm open to other options. I was saying HELOC because that's the loan product I'm most familiar with for this situation. My goal is to do repairs on the home (driveway, landscaping, minor repairs after tenant moves) & use some of those funds to purchase another investment property. What do you suggest?

Not sure from your note if you already own the property or not, but regardless, you could also do a cash-out refinance. And there are plenty of investor-specific lenders that do those in addition to traditional banks. Construction loans are also a decent option.

If you really wanted to get cray, you could take a loan out against your 401k or Whole Life policy, but especially with that 401k, you absolutely must pay it back within a set time-frame.

 

@Ronald Mejia Yes, a HELOC on a rental can be done. (I have a couple myself.)

Just call around to different lenders as every lender has their own product/rules when it comes to HELOCs. Here's a few places you can start with...PenFed, Union Bank, and Wells Fargo (all do HELOCs on rentals).

And when you're calling around, here's a blog post I wrote a few years ago with some info on the subject so you'll know what questions to ask: What You Need to Know When Shopping for a HELOC

Good luck!

I'm a LO working at a mortgage broker in Orange County and many of our lenders have pulled their HELOC products since COVID-19 has started. The few lenders that are still offering them are only doing it on primary residences and their overlays are quite stringent. A cash-out refinance may not be a bad idea especially if the home is already paid off and on top of that, most HELOCS are variable rates. Can I ask, why not do it on your primary?

I've gleaned these lenders from the kind people on BP. I have used PenFed and TD Bank for HELOCs on my own investment property. Post back if you find another lender who serves you well, and I will add them to my list and pay it forward. These were all sourced pre-CV19, so eat the fish and spit out the bones.

Ridge Lending All in One, first position HELOC

AFCU does 80% LTV on NOO. Utah

Americafirst 80% LTV on noo 65% LTV Utah

Arvest Bank AR, OK, AL, MO

Bank of the west

BB&T will loan on a rental portfolio

BBVA Compass

Boeing employee credit union

Bank of West (BNP Paribas) 60% LTV ELOCs

California: Cal Coast Credit Union and Fremont Bank

Citizens Bank -Minnesota, only in-state. Kyle Potswald

Citizens first position HELOC

CMG a financial 70% LTV

East West Bank, up to 60% LTV with "no docs"

Figure 80% on a rental, not in LLC

First Florida Credit Union https://firstflorida.cumortgagecenter.com

First Commonwealth

First Midwest, up to 90% Chicago area

First Republic - California

Great Lakes Credit Union

Veritex , Texas HELOC

HSBC 70%, for premier clients only

Huntington 75% LTV 5 yr IO product available

Hurst Lending and Insurance Investment property HELOC in Texas. No seasoning.

Key Bank, FLorida flexible lender, HELOCs on second homes and rental properties. 90% LTV on primary.

Merchants Bank MN See Pavel Ushakov

PenFed - max 3 other properties, 89% LTV

Qurorum Federal Credit Union 80% equity, owned by LLC is OK. 5 year interest only payments. Tiffany Mazzoccoli.

Regions- yes HELOC but no LOC

SCCU Florida 70% LTV, 6.25% interest only, not LLC

Signature Federal Credit Union 75% LTV

Sound CU "non-owner occupied HELOC, capped at $150K and interest rates are prime + 2%, 3% or 4%, based on credit, not to exceed 70% ltv."

S&T Pennsylvania

TCF Bank

TD Bank

TIAA Direct was EverBank

Trustco

Union Bank, specializes in noo HELOC. KCMO, NE

Union Bank, MUFG.

US Bank

Vectra Bank

WSFS...up to 70% on rentaL

TEXAS https://www.cutx.org/home-equity-loans/helocs

https://www.bankoftexas.com/Personal/Products-and-Services/Loans-and-Lines-of-Credit/Home-Loans/Home-Equity-Lines-of-Credit

https://www.frostbank.com/personal/banking/home-loans/equity-line-of-credit

Some lenders say they can do HELOCs on rentals but they waste your time. Many of them haven't updated their policies yet, or they have tightened lending requirements so much it is impossible to obtain a HELOC I just spent 5 months trying to get a HELOC on a rental property with PenFED and Wells Fargo and failed on both. I changed the rental into my own name, ordered appraisals, etc. Total waste of time, money and effort. My credit score, cash flow, DTI were all excellent.

We shouldn't be recommending banks or lenders unless we have been successful recently obtaining that type of loan.  

Originally posted by @Ronald Mejia :

I am looking around for a lender that will do a HELOC on my investment property but coming up short. The banks i've called so far either does not offer the product of can't do it on investment property. Does anyone have any suggestions? My SFH is currently rented and free of mortgage cash flowing 3k/month before taxes. Im looking to get a HELOC to do some repairs to the home and use portion for down payment on new property. PLEASE HELP BP!

 Hey Ronald,

If your property is in your name Huntington can do it (if you qualify of course), not sure how it is if the house is in an LLC. Be prepared to suffer thru the qualification process banks are requiring more stuff nowadays.

@Roy Gutierrez are you finding more hurdles to clear when attempting this on an investment property versus primary residence? I've had this question asked several times recently by investors I am working with, still trying to determine how this all works. 

Originally posted by @Scott Friedmann :

Some lenders say they can do HELOCs on rentals but they waste your time. Many of them haven't updated their policies yet, or they have tightened lending requirements so much it is impossible to obtain a HELOC I just spent 5 months trying to get a HELOC on a rental property with PenFED and Wells Fargo and failed on both. I changed the rental into my own name, ordered appraisals, etc. Total waste of time, money and effort. My credit score, cash flow, DTI were all excellent.

We shouldn't be recommending banks or lenders unless we have been successful recently obtaining that type of loan.  

Scott,

I was able to do a HELOC with Huntington under my name but not sure how bad it is now, I know doing a refi has taken me about 5 months and will just be closing probably next week.

 

Originally posted by @Jesse Mancuso :

@Roy Gutierrez are you finding more hurdles to clear when attempting this on an investment property versus primary residence? I've had this question asked several times recently by investors I am working with, still trying to determine how this all works. 

Jesse,

I did my HELOC before the pandemic and it took more effort because of my DTI, not sure how it is now but definitely more difficult because of the tightened requirements. It should be easier with a primary I imagine, all banks work with primary but not all with investment. Also now new mortgages take precedence over refis and I imagine HELOCS as well.

 

Keep on making phone calls! You'll have better luck reaching out to the local community banks instead of the larger national ones. There are not many banks that will do HELOCs on rental properties, but they are out there. I have a HELOC on some of my rentals, but it took me some time to commit to making phone calls. What I've done was google map my property, then search for every financial institution in that area and started hitting the phone. I kept a record of every bank I called to keep track of their lending criteria and terms. The hurdle you will likely experience is not that you won't find a bank that will do a HELOC, is finding a bank that will do a HELOC on a property owned under an LLC - I haven't found one yet and is the reason I own a couple of properties under my name. So if your property is owned under an LLC, you will need to make some decisions on whether you want to deed the property out of the LLC and into your name to obtain that HELOC. Make sure you understand the consequences of the deed transfer. In some markets they will consider that a "sale" and require transfer taxes to be paid. You will also lose the asset protection that comes with owning the property under an LLC. But you can mitigate that with having good quality tenants, a great property manager, and adding an umbrella policy to your insurance. Good Luck!