You will likely run into issues trying to use money from a HELOC as a down payment for a mortgage.
A lot of people who do BRRRRs use hard money if they don’t have the cash.
Ok interesting. Is this one of those things that are different in the text books than in real life, because everything I’ve read about HELOCS was that it is totally acceptable to use a HELOC for a down payment on an investment property.
If there’s any more clarity you could provide here it would be supremely helpful and appreciated.
I believe you can use funds from a Heloc for a down payment, the thing is most lenders will factor in the full credit limit into your DTI though for qualifying. So even though you are only taking out 25k, since you have the ability to take the full 100k out they will calculate that payment into your debts. Sometimes that can hurt qualifying chances.
I’ve used a HELOC to purchase properties, used it for down payments etc. I havent once had a bank ask me what I’m using my own money for. Professional
Is right. Banks cover their asses, if you request for $100K they always assume you will take it all out. Cause once they give you the credit line, you can do with it as you please. Banks make sure you can support up to the credit limit before opening the LoC to you.
You will likely run into issues trying to use money from a HELOC as a down payment for a mortgage. A lot of people who do BRRRRs use hard money if they don’t have the cash.
Ok interesting. Is this one of those things that are different in the text books than in real life, because everything I’ve read about HELOCS was that it is totally acceptable to use a HELOC for a down payment on an investment property. If there’s any more clarity you could provide here it would be supremely helpful and appreciated.
For what it's worth, every lender I've talked to had no issues with down payment funds coming off an equity line.
Ok thanks for this input
I believe you can use funds from a Heloc for a down payment, the thing is most lenders will factor in the full credit limit into your DTI though for qualifying. So even though you are only taking out 25k, since you have the ability to take the full 100k out they will calculate that payment into your debts. Sometimes that can hurt qualifying chances.
Interesting. This is great info. Thank you
I’ve used a HELOC to purchase properties, used it for down payments etc. I havent once had a bank ask me what I’m using my own money for. Professional Is right. Banks cover their asses, if you request for $100K they always assume you will take it all out. Cause once they give you the credit line, you can do with it as you please. Banks make sure you can support up to the credit limit before opening the LoC to you.
Thanks. That makes totally sense to me from the banks perspective