HELOC - what to say when the lender asks what the money is for?

[Elizabeth Rose]

Hi BP community! I'm in the process of applying for a HELOC on my primary residence, which is a condo. My plan is to use the money to purchase a multifamily property, move into one of the units and rent the other unit(s) out. My current primary residence will also become a rental.

I've called several lenders and am weighing out my options... they all ask: "What do you plan to use the money for?" What's the best response to that?

I'm concerned that if I share it's to buy more property, they may see that as a risky endeavor and charge me more for the loan or lower the LTV they'll offer. I can't say it's to pay off debt (I don't have any)... so I was thinking of saying it's for home improvement, but maybe they'll question why I'm asking for a $150k HELOC for home improvement on a condo?

Thanks in advance for your insights & expertise!

[Caroline Gerardo]

Tell the truth.