All Forum Posts by: Albert Johnson

Then, on the mortgage for the new purchase, you application will show that you are using the HELOC to partially fund the next property. Make sure your banker/mortgage agent knows that now (or ASAP) in the pre-approval process. Make sure your lender is on-board with this. The HELOC will impact your total indebtedness and your debt-to-income ratio. The mortgage for the investment property should probably be a debt service type of loan, rather than a debt-to-income loan.

Just an update:

Thanks again for the informative post. I spoke with the bank, they are still processing all the paperwork and everything is moving quickly which is great.

I told them I would be using the funds as a down payment for an investment property. They said no problem as I could use it as I wish.

Also they informed me my loan would be structured as a debt to to income ratio rather than debt to service because i don't have a business. (Something I need to set up). If I did everything under the business they wouldn't do debt to income.Also when I use HELOC for a down payment I would just put in an application for a new mortgage on the remaining balance of the investment property.

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Quote from @Josh Edwards:

Hey @Albert Johnson,

Carini's answer above is correct- get the HELOC first and then let whatever lender you're working with know that you will be using HELOC funds for down payment. Nothing wrong with doing this, if done responsibly it can be a great way to leverage your equity and keep your capital working for you.

Most debt service loans are going to require at least 20% down, which for your scenario ($200k purchase, $20k HELOC) means that you will need at least an additional $10k to bring to closing.

Hope this helps!

Thanks. That helps a lot!

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Thanks. I will let them know right away what the funds will be used for.

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Hi I am new to this. I am currently in the process of getting approved for HELOC. My question is can I use HELOC to put as a down payment towards another property even if my HELOC is less than the property I want to buy? Would I need a second mortgage?

as an example the home is $200,000 and HELOC $20,000.

Also when do you normally make an offer on the property? I haven't gotten the HELOC yet.

thanks in advance

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All Forum Posts by: Albert Johnson

Albert Johnson has started 29 posts and replied 104 times.

Post: Need help using HELOC to buy investment property

Post: Need help using HELOC to buy investment property

Post: Need help using HELOC to buy investment property

Post: Need help using HELOC to buy investment property