Using HELOC for investment property questions

[Jacob D.]

I'd like to setup a HELOC on my house and purchase another multi-family.

1. Once the HELOC is setup, do I need to draw the funds into my bank account (for the down payment), or can it stay as credit until I purchase the house? Basically, can I directly write a check from my HELOC to fund the down payment at closing or will it need to be seasoned in my bank account?

2. If I have a 10 year interest only HELOC, will my lender add in the principal payments when calculating DTI?

3. My 3 family has been rented out for a year and I already filed taxes, will my lender use the full rent from my lease or some risk-adjusted percentage of rents (like 75%)?

4. I've read that DTI for investment properties must be under 43%. With my next purchase it will be about 38-40%. Given this, is it possible to find a bank that will let me put down 15 or 20% - 30 year fixed right now?

[Jacob D.]

@Brian G. @Jody Sperling Thank you for your responses. I do have a quick follow up:

When a bank is looking at your financials (bank statements and etc), and 50% of the downpayment is coming from a HELOC - what will they say when I don't have enough cash to cover the down payment in my account?