Bank is declining my HELOC - HELP!
Member since 2025 · 4 posts · 0 votes
Bank is declining my HELOC - HELP!
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Jaycee GreenePro Member
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votesI assumed a total loan of around $90k with a monthly payment of just under $1,600 using a random SF property in Indy with a similar asking price. Check this link, Indy SFR Proforma, for my attempt at a proforma on a random SF property in Indy.
9 Replies
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
Quote from @Paul Whitehurst:
Hi, I am looking at getting into investment properties. I understand this is a good way to become financially secure over time and am eager to start. I want to use my current home and do a HELOC. My home is worth around 215k and I owe 127k. I was told I could get 65k out in a HELOC (90%). I went to get the HELOC and they asked what it was for, I told them an investment property of 290k. I am not familiar with how HELOCs work but they declined me saying my DTI is too high. Stating that they are using the mortgage of the investment property as a reason because it would put me above their threshold.
Are there ways around this? I had no idea they would decline me for MY OWN MONEY technically. Should I have just not told them what it was for? Or what are other ways I can access this equity to purchase? Thank you
Hey @Paul Whitehurst, welcome to the BP Forum! Can you share some additional numbers about the investment property you're looking to buy? Are there any rehab costs? What will the rent be?
Lenders often include a portion of the cash flow in the investment property as income to you personally to offset the DTI.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Paul Whitehurst:
Hi, I am looking at getting into investment properties. I understand this is a good way to become financially secure over time and am eager to start. I want to use my current home and do a HELOC. My home is worth around 215k and I owe 127k. I was told I could get 65k out in a HELOC (90%). I went to get the HELOC and they asked what it was for, I told them an investment property of 290k. I am not familiar with how HELOCs work but they declined me saying my DTI is too high. Stating that they are using the mortgage of the investment property as a reason because it would put me above their threshold.
Are there ways around this? I had no idea they would decline me for MY OWN MONEY technically. Should I have just not told them what it was for? Or what are other ways I can access this equity to purchase? Thank you
you can only use your equity if you have the ability to pay it back. So lets say you own a home with $100k in equity but have zero income. A bank will not give you the $ as you have to show ability to repay the loan.
Lender will always look at it from two perspectives:
1. What is the loan to value - this is for risk and secure the real estate to make sure its not unsecured.
2. Ability to repay - can you as the borrower afford the payments based on the loan amount.
Typically they will not take into consideration the mortgage on a new property that has not been taken out as that is new. But one question is can you afford the payments for the HELOC on its own
7e investments53 Reviews - Member since 2025 · 4 posts · 0 votes1y
Quote from @Jaycee Greene:
Quote from @Paul Whitehurst:
Hi, I am looking at getting into investment properties. I understand this is a good way to become financially secure over time and am eager to start. I want to use my current home and do a HELOC. My home is worth around 215k and I owe 127k. I was told I could get 65k out in a HELOC (90%). I went to get the HELOC and they asked what it was for, I told them an investment property of 290k. I am not familiar with how HELOCs work but they declined me saying my DTI is too high. Stating that they are using the mortgage of the investment property as a reason because it would put me above their threshold.
Are there ways around this? I had no idea they would decline me for MY OWN MONEY technically. Should I have just not told them what it was for? Or what are other ways I can access this equity to purchase? Thank you
Hey @Paul Whitehurst, welcome to the BP Forum! Can you share some additional numbers about the investment property you're looking to buy? Are there any rehab costs? What will the rent be?
Lenders often include a portion of the cash flow in the investment property as income to you personally to offset the DTI.
It is turnkey and no rehab needed as they already did this. Price is 290k and I will put 25% down. Rent is 3300 a month. They said they will not take rent into consideration and declined me because they are using the mortgage of that new loan, my current mortgage and HELOC payment off of just my income now, which is dumb because of course I can't qualify. I guess that's what I get for telling them what HELOC was for. I will just go to another bank and not tell them it's for an investment property.
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
Quote from @Paul Whitehurst:
Quote from @Jaycee Greene:
Quote from @Paul Whitehurst:
Hi, I am looking at getting into investment properties. I understand this is a good way to become financially secure over time and am eager to start. I want to use my current home and do a HELOC. My home is worth around 215k and I owe 127k. I was told I could get 65k out in a HELOC (90%). I went to get the HELOC and they asked what it was for, I told them an investment property of 290k. I am not familiar with how HELOCs work but they declined me saying my DTI is too high. Stating that they are using the mortgage of the investment property as a reason because it would put me above their threshold.
Are there ways around this? I had no idea they would decline me for MY OWN MONEY technically. Should I have just not told them what it was for? Or what are other ways I can access this equity to purchase? Thank you
Hey @Paul Whitehurst, welcome to the BP Forum! Can you share some additional numbers about the investment property you're looking to buy? Are there any rehab costs? What will the rent be?
Lenders often include a portion of the cash flow in the investment property as income to you personally to offset the DTI.
It is turnkey and no rehab needed as they already did this. Price is 290k and I will put 25% down. Rent is 3300 a month. They said they will not take rent into consideration and declined me because they are using the mortgage of that new loan, my current mortgage and HELOC payment off of just my income now, which is dumb because of course I can't qualify. I guess that's what I get for telling them what HELOC was for. I will just go to another bank and not tell them it's for an investment property.
Is the property in Indy? Was the 1st bank you went to NBI by any chance?
- Member since 2025 · 4 posts · 0 votes1yIt’s actually in Frankfort, IN and bank was Centier only because I had my primary mortgage through them.
Quote from @Jaycee Greene:
Quote from @Paul Whitehurst:
Quote from @Jaycee Greene:
Quote from @Paul Whitehurst:
Hi, I am looking at getting into investment properties. I understand this is a good way to become financially secure over time and am eager to start. I want to use my current home and do a HELOC. My home is worth around 215k and I owe 127k. I was told I could get 65k out in a HELOC (90%). I went to get the HELOC and they asked what it was for, I told them an investment property of 290k. I am not familiar with how HELOCs work but they declined me saying my DTI is too high. Stating that they are using the mortgage of the investment property as a reason because it would put me above their threshold.
Are there ways around this? I had no idea they would decline me for MY OWN MONEY technically. Should I have just not told them what it was for? Or what are other ways I can access this equity to purchase? Thank you
Hey @Paul Whitehurst, welcome to the BP Forum! Can you share some additional numbers about the investment property you're looking to buy? Are there any rehab costs? What will the rent be?
Lenders often include a portion of the cash flow in the investment property as income to you personally to offset the DTI.
It is turnkey and no rehab needed as they already did this. Price is 290k and I will put 25% down. Rent is 3300 a month. They said they will not take rent into consideration and declined me because they are using the mortgage of that new loan, my current mortgage and HELOC payment off of just my income now, which is dumb because of course I can't qualify. I guess that's what I get for telling them what HELOC was for. I will just go to another bank and not tell them it's for an investment property.
Is the property in Indy? Was the 1st bank you went to NBI by any chance?
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
I ran your numbers through my own development proforma analyzer and it looks really good as a DSCR loan. I'd estimate your cash flow after you pay the loan payment would be $600-$800, which a lender that understands investment real estate should give you some credit for on your DTI.
As for a bank, I have a specific lender at NBI that I would recommend.
- Member since 2025 · 4 posts · 0 votes1yThat 600-800 you are factoring in the HELOC repayment each month too, correct?
Quote from @Jaycee Greene:
I ran your numbers through my own development proforma analyzer and it looks really good as a DSCR loan. I'd estimate your cash flow after you pay the loan payment would be $600-$800, which a lender that understands investment real estate should give you some credit for on your DTI.
As for a bank, I have a specific lender at NBI that I would recommend.
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
I assumed a total loan of around $90k with a monthly payment of just under $1,600 using a random SF property in Indy with a similar asking price. Check this link, Indy SFR Proforma, for my attempt at a proforma on a random SF property in Indy.
- 1yMax C MooreBusiness MemberRealtor · Indianapolis, IN · Member since 2021 · 32 posts · 13 votes
I've often seen this happen where initial approval is given, but debt-to-income issues arise once they discover you're purchasing another property. One solution I've seen is closing the purchase in cash, then securing the HELOC afterward, though this carries more risk. If the property is leased, that might help. I'm assuming you're using the HELOC as a down payment?
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