Using a heloc for downpayment

[Andres Bernal]

Hey guys, Im a real estate investor with a few buy and hold in Connecticut. Currently I’m thinking about using a Heloc as a down payment for my next property. I have two questions: 1. Creating a line of credit will affect my DTI before I purchase the property? 2. Recommendations on how and which banks should I be using for a HELOC. Thank you,

[JD Gunter]

Andres,

I have used the HELOC strategy and loved it. When you don't need the HELOC for down payments, it's nice to have that ready cash for repairs, etc.

1. Creating a line of credit on which you haven't drawn will not affect your DTI with most companies. For example, if you had a credit card with a $20,000 limit, but no balance, it wouldn't impact your DTI. The HELOC works the same way. It's just a line you can use, but having a balance will hit your DTI. That being said, a local bank may take an open line into consideration, but most won't.

2. I've had the most success with small, local credit unions. I asked a mortgage broker friend and he directed me to a local credit union that will loan up to 90% ltv and paid for the drive-by appraisal and origination. That was one of the best credit lines I've ever gotten. 

I hope this helps. Good luck on your next investment!