How long do HELOC funds need to "age" before using for investment

[Mike Malfitani]

Hi all!

This is my first thread on BP as I've been spending the majority of my time researching and reading on the forums, however I do have 1 quick question i was hoping you all could help me with.

I intend to use a HELOC on my primary residence for my first rental purchase and through my research i've learned that banks like to see funds in a bank account for a certain period of time, before they are willing to accept those funds as a viable down payment for a loan on an investment property.

This is interesting to me, because the obvious goal with a HELOC is not to use those funds until the last minute, since you are paying interest on them. However, if a bank states they'd like to see funds in a bank account for at least 2-3 months, before they are willing to accept those funds as a down payment, it doesnt leave many options.

Example: I need 20k down to purchase my first investment property and i have a HELOC for 100k. If i just pay myself from that HELOC into a bank account, how long do the funds need to sit there before the bank is willing to accept them as a viable down payment for the investment property?

Thanks everyone!

[Andrew Postell]

@Mike Malfitani if you are referring to a conforming, conventional loan or a government loan then you do not need to season HELOC funds. If the funds are secured from a residential property they do not need to be in your account for any period of time. The lender will want to know what your payment is on the HELOC with the assumed draw amount. If your bank is saying that they need them to be seasoned then go to another bank. Sometimes a bank has extra rules, we call these "overlays", but you should be able to find financing relatively easy without having to season those funds. Hope this helps!