Using a HELOC to buy an Investment Property

[Eric Rodriguez]

Hi BiggerPocket,

I recently reached out to my lender to ask about using a home equity line of credit as my down payment and reserve funds for purchasing another property and was informed that this is viable however, the lender requires a minimum of two months for the funds to be sitting in the bank. Is this your experience with all lenders or is there a way around the two month waiting period? Thank you in advance guys.

[Andrew B.]

I think what's happening is that lenders don't like to see you using borrowed funds as a down payments. when you get the loan, the lender will look over your last two months bank statements, and any large deposit or transfer will be scrutinized as to the source. If the HELOC funds sit in your account for two months, no one will see the source of those funds.