Using a HELOC for a down payment

[Matthew R Mofield]

I recently opened a HELOC on my personal home in hopes to use some of that money for a down payment on a rental property. I have been looking at various properties in my area (single family) as potential investments. My question is...how do I use my HELOC for the down payment on the property initially and then refinance the property later and pay that HELOC back off. I’ve been told that this can be done. Is this possible? What stipulations are there for this to work? I’m a new investor and any help I could get is appreciated.

[Bob Green]

Hello Matthew,

First you will draw down the required funds from HELOC and deposit in your bank account. Depending on the equity position in the property, you may be able to refinance with a local community bank or protfolio lender that does not require value seasoning, therefore refinance based on fair market value of the property and cash out original down payment funds to pay back the heloc.