Credit Union says no to using HELOC?

[Tabitha Fox]

We're in process of refinancing our primary home and I asked our mortgage specialist about opening a HELOC so we could use it for a down payment on an investment property. She said that they typically do not offer the HELOC for use of a down payment on an investment.

I'm confused. I thought that's how many investments are bought? What am I missing?

[Kyle J.]

It's entirely lender-specific.  Lenders will usually ask you when you apply what you intend to use the money for because they often have things that they do not allow it to be used for.  That's why it's important to ask them up front if they have anything that they don't allow the money to be used for, so that you don't go through the whole application process only to find out that you can't use the money for what you intended to use it for. 

I've had one lender tell me they don't allow their HELOCs to be used for "new property purchases" or "for business purposes", and I had another lender tell me that the only thing theirs can't be used for is "educational uses".  Go figure. 

I suggest if one lender doesn't permit the use you need/intend to use the money for, just find another one.  Like I said, it's very lender-specific.