Any banks that can allow you to use a Heloc as a down payment?

[Joel Gierbolini]

Just a Newbie trying to the BRRR strategy 😅

I have been contacting a lot of banks and have not had any luck finding a bank that can let me use my HELOC as a down payment on a property. Any suggestions? Gracias in advance!

[Chris Mason]

Originally posted by @Joel Gierbolini:

@Chris Mason this is for answering! Can you please give me an example

Sure. You currently own a primary residence with a $2501 payment (PITIA). You have a $201 car payment. You make $6500/mo, thus have a 41.6% DTI. [$2500 + $201] / $6500.

You spot a property you like. It'll rent for $4000/mo. Payment on the HELOC will be $300/mo. Payment on the new home will be $2500/mo.

$4000 * 75% - $2500 = $500. Add that to income.

[$2501 + $201 + $300] / [$6500 + $500] = 42.8%.

Your DTI barely moved.

If the cashflow math yielded a negative number, you'd have to add that negative number in there with the car payment and personal house PITI.

Lurkers: Owner occupied real estate is much less generous with the DTI calculation.