Apply for HELOC now for future investing?

Question

So, I have a duplex that has about $150,000 in equity and I am starting to think about purchasing my next investment property.

Ideally I'd take $20-$30k out with a HELOC to fund my next downpayment. I hear that getting approved for a HELOC can take some time, so my question is should I start looking now if I plan to invest in the next 6-12 months? My timeline isn't absolute, but I do want to be ready as the market seems to be shifting in our favor.

And, my duplex is in Riverside county in socal, does anyone have any recommendations on where to apply for a HELOC?

Thanks!

Dan H. · Answer

I am assuming you do not want to REFI due to your existing loan having lower interest rate than current rates.  Normally I recommend REFI over HELOC for long term or unknown term loans, but normally the interest rates have not gone up 100%.  Recognize that most HELOC are variable rate loans and the associated risk.

I assume the duplex is not owner occupied.  HELOC on investment properties are much harder to obtain than they are to obtain on your home.  Another BP user created this list, but I only copied the data and not the poster so can not give the person who created this list their props.

here is info on investment property HELOC providers.  It is a few months out of date and was not perfectly up to date when originally posted, but is a good starting point.

AFCU does 80% LTV on NOO. Utah

Americafirst 80% LTV on noo 65% LTV Utah

Arvest Bank AR, OK, AL, MO

Bancorp South, TX Lines of Credit on free and clear houses

Bank of Southern California, CA

Bank of West (BNP Paribas) 60% LTV CA, AZ, OR

BB&T will loan on a rental portfolio

BBVA, now PNC

BECU for OR

Bellwether Community Credit Union, NH and MA 85% to 100%, draw 10 yrs

BMO Harris, 3 HELOCs to 70% LTV

Boeing Employee Credit Union

Cal Coast Credit Union, CA

Change Wholesale

Chelsea Groton Bank, CT

Citizens Bank -MN

Citizens, first position HELOC

CMG Financial 70% LTV CMG Financial in Idaho will do 100% on owner occupied.

Coastal Federal Bank of NC

Consolidated CCU, high LTV NOO LOC, OR, WA

East West Bank, up to 60% LTV with "no docs" CA, WA, NV, GA, NY, TX and MA. Super easy.

Eastern CT Savings Bank, CT

Figure 80% on a rental, not in LLC

Finance of America, 95% CLTV, second home only, 680 FICO, not TX

FirstBank CO and AZ 75% LTV

First Florida Credit Union FL

First Commonwealth

First Midwest, IL up to 90% Chicago area

First Tech Federal. OR and other Western states. Up to 80% if FICO is over 780, no appraisal under $250k value.

First Republic - CA

Fremont Bank- CA

Frost Bank - TX

Fulton Bank, PA, NJ

GFA Federal Credit Union 10 yr draw, 10 yr repay, MA, NH

Granite State CU, NH 90-100%

Great Lakes Credit Union, Chicago area IL

GTE Financial, Tampa, Sarasota area FL w 2 yrs tax history on property

Hanscom FCU, TX

HSBC 70%, for premier clients only. FL, NY, MD, CA, VA, NJ,

Horizon Bank, Kalamazoo MI

Huntington MI 75% LTV 5 yr IO product available. Someone reported 80%…need confirmation

Hurst Lending and Insurance Investment property HELOC in Texas. No seasoning. Bridge, portfolio, foreign national and other specialty loan products.

KeyBank, flexible lender, HELOCs on second

homes and rental properties. 90% LTV on primary. BLOC FL, CO, OH, UT, ID

Lafayette Ambassador Bank

Merchants Bank MN See Pavel Ushakov

Mid-Hudson Valley FCU

Mountain America CU Utah, ID, MT, NV, AZ, NM. 85% LTV, promo rate of 1.99%. Can refi an existing mortgage to a shorter term "Mini Mortgage." Currently on pause. Let me know if they start up again.

Navy Federal 80% LTV

Norway Savings Bank, Maine

Omaha Mortgage

Oregonians CU - OR

PenFed - PAUSED. Let me know if they start again. Was max 3 other properties, including primary. 80% LTV, prime + 1%, <4 properties. Pulls Equifax.

Peoples Bank of NC

PSECU up to 80%

Quorum Federal Credit Union 80% LTV, owned by LLC is OK. Very flexible lender. NY. 5 year draw, IO for 5 yrs and PI for 10 year repayment period. FICO at least 680. Not in Texas.

Quontic

Red Canoe Credit Union, WA OR

Regions

River Bank & Trust, AL

Rivermark Credit Union, OR 90% LTV

SCCU Florida 80% LTV, 2.75% first year promo, not LLC

SECU NC 65% LTV rate 2.75% Oct 2021

Signature Federal Credit Union 75% LTV (100% on primary residence), VA

Silvergate Bank, CA

Sound CU "non-owner occupied HELOC, capped at $150K and interest rates are prime + 2%, 3% or 4%, based on credit, not to exceed 70% ltv." CT

SouthEast Bank TN

Symmetry

S&T Bank, PA

TCF Bank, FL, GA

TD Bank 75% line with FICO about 740. Up to 4 properties.

Torrey Pines Bank, see also Western Alliance Bank Corp. Commercial real estate solutions for developers, home builders.

Troy Bank & Trust, AL

Trustco Bank, FL, NY, NJ, MA, VT

Trustmark Bank, TX. Call it a LOC rather than a HELOC

Union Bank, specializes in noo HELOC. KCMO, NE., MUFG.

Upstate Bank in Rochester NY, LOC up to 80%

US Bank 80%. “Business equity line of credit: Use Real Estate as Equity” up to $500k, interest only. gather your business and personal tax returns, financial statements, articles of incorporation and other legal documents.”

Vectra Bank - Colo

Veritex, TX HELOC

Webster Bank, CT

WAFD Bank. Origination fee 1% or $700. Can be in an LLC, max 75% LTV. WA, OR, UT, NV, ID, NM, AZ, TX. All-in-One construction loan, too.

WellsFargo 60% LTV Up to 5 properties.

Workers Credit Union, MA 80-100%

WSFS...up to 70% on rental

Zions Bank, Utah

NO: Truist

TEXAS https://www.cutx.org/home-equity-loans/helocs WAFD, Frost, Trustmark

High primary, not investment, HELOC:

Spring EQ 97.5% and fast, at 11 days

SMALL BALANCE HELOC ON PRIMARY

US Bank 15k to $750k 10 year draw. Requires high FICO 730 and LTV 70% or less

PenFed Best Credit Union $25 to $500k 10 yr draw. Up to 90% LTV.

Bank of America, low fee. $25k to $1 million, 10 year draw. HUGE line

PNC Bank best for small home improvements $10k up. 7 to 10 yr draw.

TD Bank from $8 k up. Can go from $25 to $500k…large line.

Frost Bank, in Texas only.

CALIFORNIA: Bank of Southern California, Bank of West (BNP Paribas), Cal Coast Credit Union, East West Bank, up to 60% LTV with "no docs" San Fran, First Republic, Fremont Bank, Golden1, HSBC, Quorum FCU, Silvergate Bank,

TEXAS

Frost Bank, East West Bank, Hanscom FCU, Trustmark Bank, Veritex, WAFD Bank

UTAH

Mountain American Credit Union and America First have great rates for HELOCs

America First will do a HELOC on an investment property in Utah.

STR DSCR Mortgages (not HELOCs)

Visio

Host Financial

American Heritage

LendingOne

RCN

Temple View Capital

Good luck

Cindy Tansin · Answer

I just took out a HELOC to fund an ADU that I want to build.  I may not break ground for some time, but that's fine.  There's no payment on unused LOCs.  As long as you have a game plan for paying off the HELOC balance within 10 years, this is a sound strategy.  The danger comes in making IO payments and then getting hit with payment shock when it converts to a fully amortized loan.  Always treat HELOCs as short term/temporary leverage tools and you'll do fine.

Paul Wolfson · Answer

@Timothy Allen my understanding is that your HELOC is not locked and banks can freeze them at any time if the market shifts or if your home's value drops significantly. Unless of course you already tapped your HELOC and are already paying it down while the money is standing by for deployment -- then at that point the bank can't touch it.

Deb S. · Answer

Just be aware the HELOCs are variable rates and the Fed keeps raising rates - I believe another one is coming in the next few weeks for another .75%.  These directly affect a HELOC interest rate.  So make sure you crunch your numbers and allow for a couple of rate increases if you will be using that money for a few years or more.

For reference, I took out a HELOC in early 2021 at a rate of 2.99% for 6 months and then variable after that. Month 7 (December 2021) my rate went to 5.49% which I knew was coming. My rate is now 7.745%. Just make sure you will cash flow worst case scenario if using a variable rate HELOC.

Timothy Allen · Answer

I took a HELOC out now on my primary while my value was high. I'm using it as a downpayment on multifamilys now. I think its a great idea to lock in your HELOC now while property values are high.

Jason Bohling · Answer

Hi @Kevin King, so I took a HELOC out on my primary for future investments as well.  HELOCS, depending on lender, actually get approved pretty fast typically. I applied one day and then signed documents three days later and it was funded within the next Friday.  One thing to keep in mind is how much you can take out is a little different than the calculation you typically see. For example, if you have a property worth $400k and a loan of $100k, you have $300k in equity.  So, if a lender is offering a HELOC at 80% loan to value (LTV) you would assume, $300k equity x 80% LTV would equal a HELOC of $240k; in actuality they take the $400k x 80% LTV which would equal a total credit line of $320k, minus your existing $100k mortgage balance would mean a HELOC of $220k-thats a $20k difference.  I mentioned this so that you can make sure a HELOC would still work for your numbers.  Also, shop around because different lenders will offer different amounts. I was able to get my HELOC through a large local credit union and they were able to give me 90% LTV.  Also, I would take the largest HELOC you’re comfortable with, as if you use it, it will affect your debt-to-income ratio (DTI) for refinancing and other credit.

Also, as @Paul Wolfson mentioned, ask each lender what they did during the initial COVID shutdown and the GFC 2008-2010, as far as did they freeze or call their HELOCS.  When COVID hit, many lenders did freeze their HELOCS as he said, so you could not access any money you have not already accessed, some of them went ahead and canceled the HELOCS which immediately turns the balance owed into a loan.  I chose the one I did because during the GFC 2008-2010, they never called or froze their HELOCS. So I figured, if they are going to keep them open and available during that, then it should be a pretty safe bet that mine will stay open.

Paul Wolfson · Answer

@Nicholas Coulter I am also interested in this so if you don’t mind sharing I would appreciate it.

Nicholas Coulter · Answer

@Kevin King I am doing this same thing. Looking to get myself set to have that Heloc in place when I find the right property. I have a lender I really like working with! Ill DM you to connect.

Kevin King · Answer

Thanks everyone for the replies! Very helpful. I have been calling banks from the list that @Jason Bohling provided, but I'm getting denied left and right.

Are there any banks or credit unions in socal that we know of that will offer HELOC on MFR investment properties?

Thanks again!

Rob Lawrence · Answer

No brainer, I do it

Apply for HELOC now for future investing?

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