How Does A HELOC Work? Qualifications?

[Shannon K.]

Hi everyone. Up until this point we've looked strictly for flip properties using hard money. I'm now looking at a live-in owner-occupied flip using an FHA loan. Here's what I need help with……..

Purchase price: $85,000 (FHA loan)

Rehab: $40,000 (my own cash)

ARV: $200,000

Since the house has now appraised at $200,000 x 80% = $160,000 and I owe $85,000 on the mortgage, $160,000 - $85,000 = $75,000 in equity for a HELOC (to purchase future properties)?

****What are the qualifications I need to meet to be able to utilize this $75,000 equity? DTI ratio? Income level? How can I be sure I will qualify to gain a HELOC and utilize the equity I’ve created?****

This route has never even crossed my mind until we got this baby under contract which I would like to live in, so I have some quick learning to do here… Thank you!