HELOC

[Dennis Standers]

Hello Everyone, I am re-posting this question to change the subject from HELC to HELOC so it will hit user key words. Thank you. My wife and I are trying to buy a duplex in our town. We already have a nice SFH that we are renting out and we are now renting an apartment to live in. We have had the rental home for about 2 years and we are looking into a home equity line of credit to use as a down payment for the duplex and get FHA at 3.5% down. We will live in 1 side and rent out the other. Has anyone used this model for getting started? What obstacles or pitfalls may I encounter? Will this model work? Thanks to any input. Dennis

[Andrew Robbins]

This is how I bought my triplex in 2009. I was fortunate enough to get a HELOC on my primary residence to use as the down payment of 25% (that's what was the minimum required for non-owner occupied). Then I just got a conventional loan for the other 75%. It's worked out great.

Of course 5 years later, my primary residence has appreciated quite a bit, so I just got a much bigger HELOC to use as a down payment on a second property.