Getting a Line of Credit after retiring
I recently retired but want to continue to drive income through real estate investing.
My goal was to use the good amount of equity in my current home to finance the first purchase but my bank won't lend without a current income stream. Any suggestions other than going hard money?
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#1 Tax, SDIRAs & Cost Segregation Contributor
- CPA, CFP®, PFS
- FL
A few paths besides hard money are worth exploring here. A HELOC on your home, rather than a full cash-out refi, sometimes has more flexible qualification since it's underwritten differently by some lenders and can lean more heavily on home equity and credit than active income. A DSCR loan on the property you're buying is another option since it qualifies based on the property's rental income rather than your personal income stream, that sidesteps the "no current income" problem entirely since it's the deal itself being underwritten, not you.
On the tax side, whichever route you use to pull equity from your primary home, keep those funds traced clearly to the investment purchase, that's what keeps the interest deductible against the rental income once it's placed in service. Since you're retired, also worth checking whether any retirement account distributions or other income sources you do have might affect how a lender views your qualifying income differently than "no income" the way it might be showing on paper, that's worth clarifying with a mortgage broker who understands retiree-specific underwriting rather than assuming a standard conventional lender's rejection is the final word.
Happy to connect!
- Ashish Acharya
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- 941-914-7779
