HELOC for BRRRR, will it affect my DTI for the refinance?

[Juan Castro]

Hi all, I'm looking to start a BRRRR project soon and I'm considering using my HELOC for financing the project. I have a HELOC with $140k and interest of 4.13% (variable) and about 50k cash. So I know a lot of you rely on private/hard money lenders, but my thought is that the interest rate in the HELOC is so low that it will save me tons in holding cost. Once the refinance is complete I can pay back the HELOC and hopefully recoup most of my cash.

I've thinking about it and my only concern would be that borrowing from the HELOC will affect my DTI and cause issues with the refinance, any thoughts? For the record my credit is around 800, I have no debt (other than my primary residence) and I have a stable w2 job with great income.

I appreciate the help.

[Blake Dailey]

It sounds like based on your personal situation the HELOC wouldn't hurt your refinance. You could always open a commercial line of credit with your LLC so that it is off of your personal DTI. If not, once you take the money out of your HELOC to use on the BRRRR, it will count towards your DTI. But based on your personal situation with low debt, high income, and great credit you should be fine. Another option could be to refinance with a commercial loan if a residential lender does have issue with your DTI. If you don't go above 50% with the new proposed mortgage it shouldn't be a problem.