Using Home Equity Loan as down payment for investament property?

[Sarah Byun]

There's principal balance left to Home Equity Loan on our primary home.  If we pay off the balance and reapply for another Home Equity Loan to use as our down payment, what are the chances of getting the mortgage for investment property?  Is this worth the way? 

We have trouble using our cash for our down payment so, we are thinking of this option to meet our closing deadline (perhaps extend few weeks) to get approved loan.  Is this not a good option to think about?

Our DTI, income, credit score all seem to be good to go. Its just the proof of the asset is at freeze...

[Logan Drew]

If you can qualify with regards to DTI, you should have no problem utilizing a HELOC to close another property. Since the HELOC is actually 'your equity', it is not treated the same as other borrowed funds (like an unsecured personal loan or credit card). Consult with your loan officer though as some lenders may apply an 'overlay' and might have rules against allowing this. That said, generally speaking about guidelines, you should have no problem using your HELOC to help you close the purchase of another property.