Using HELOC: for down payment or full purchase?

[Lawrence Cargnoni]

Hi all,  

What is your feedback using a HELOC of a primary residence to purchase rental properties?

1. Use for a down payment

2. Purchase house outright

In both cases, the interest for the HELOC will be higher than the interest rate from a conventional or DSCR loan (at least in my case).

1. Use for a down payment

The rent needs to cover the HELOC payment and the loan payment

Do lenders allow this?

2. Purchase house outright

The rent needs to cover the HELOC payment

If the house is refinanced, then the rent would need to cover the new loan payment as well as HELOC payment for the remaining 20% equity

Thoughts, feedback, corrections, please?

Kind regards,

LarryC