Home equity as down payment

[Matt Lanza]

Hello all,

When or when not is this a good idea. I know I do not want our savings to take such a hit.

Thanks in advance.

[Eric Black]

Hi Matt,

This can be a pretty loaded question and we don't know how much we're talking about but in a nutshell I would say you have to ask yourself this:

If you use the HELOC as a down payment and something happens in your life where you need to use your savings up, will you be comfortable having a fully financed property and little to no savings?

Second, if you get financing on the house and use your home equity as the down payment so the house is technically 100% financed, will it still cash flow?

We have used this method to purchase a few houses now so it can be done but you have to decide your comfort level.

Cheers!

Eric