Top HELOC Providers to Buy a New House Using Current Home Equity

The Quick Read: Buying a new house with current home equity usually means opening a line on the home you own, drawing the down payment from it, and documenting that draw for the purchase lender, while the right provider for you depends on occupancy, credit profile, combined leverage, and how the purchase lender treats borrowed funds. Lendmire is a mortgage broker, so it matches a file to a wholesale program instead of ranking companies.

• On an investment property, equity lines in Lendmire’s wholesale network top out at 70% CLTV, with a 700 minimum credit profile and a maximum line of $500,000.
• On primary residences and second homes, the ceiling reaches 90% CLTV only at a 720-or-better credit profile, up to $500,000.
• At least 75% of the line is drawn at closing, and the payment floats and never converts to fixed.
• The line payment stays outside the new property’s DSCR, but you still pay it from your own cash flow.
• If the new house is a rental, a DSCR purchase loan typically lands at 75%-80% LTV, so the line has to cover a real down payment.

What Makes a Provider the Right Fit for a Purchase?

The right provider is the one whose program matches your occupancy, credit score, and leverage need. A ranked list of companies cannot tell you that. Three provider types handle most of these deals. One is a bank or credit union line on a primary residence. Another is a specialty equity line that allows second homes or investment properties. The third is a DSCR cash-out refinance on a rental you already own.

Lendmire does not rank or name lenders. It works with select wholesale HELOC lenders and matches the scenario to the program. The lenders that write your file depend on the property, the equity, and your credit. Five screens decide the fit:

1. Occupancy of the collateral. A primary-residence line, a second-home line, and an investment-property line carry different ceilings.

2. Credit tier. The leverage you can reach rises with your score.

3. Combined leverage. Your first mortgage plus the new line must fit under the CLTV cap.

4. How borrowed funds are treated. The purchase lender decides whether the draw counts as down payment, reserves, or neither.

5. Title. Many equity lines require the borrower’s own name or a revocable trust.

Lendmire’s HELOC programs are available in 16 states. That is narrower than the 41-market DSCR footprint, which includes Washington, D.C.

How Does Underwriting Treat the Line, Step by Step?

The line is underwritten first, and the purchase loan is underwritten second. Each loan is judged on its own file, so the sequence matters.

Step one: pick the collateral. Most borrowers use the home they live in. A line on an existing rental is a narrower product, and fewer lenders write it.

Step two: qualify the line. The lender reviews equity, credit, income, and debts. In this network, debt-to-income tops out at 50%. The limit drops to 45% for credit profiles from 600 to 679, so any ratio above 45% needs a score of at least 680. The line is qualified on the interest-only payment calculated on the maximum draw. That is a stricter test than the amount you plan to use.

Step three: value the home. Lines at or below $500,000 ordinarily run an automated valuation, with no traditional appraisal. Every line above $500,000 requires a full appraisal, and a borrower may request one in any case. A higher CLTV on a smaller line may also call for a secondary valuation.

Step four: draw. At least 75% of the line is drawn at closing. Payments during the draw period are interest-only. A CFPB explainer on home equity lines describes the structure: a draw period when you can borrow repeatedly, then a repayment period when you can no longer borrow.

Step five: document the funds. Keep the closing documents, the draw record, and the transfer into your account or to title. The purchase lender then decides how to treat the money. Ask that question against the purchase program’s guidelines before you draw, not after.

Step six: close the purchase. For a rental, a DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal debt-to-income ratio is not the test on that loan.

What Are the Network’s Ceilings by Occupancy?

The ceiling depends on what the collateral property is used for. The table shows the top tier for each occupancy. All figures are typical program guidelines, subject to lender review and a full file.

A line above $500,000 is available on a primary residence only. It requires a credit profile of 700 or better (720 on the longer-runway program), caps at 75% CLTV, and requires a full appraisal.

Lower credit tiers step the ceiling down. On a primary residence, a 660 profile reaches 85% CLTV up to $500,000. A 640 profile reaches 80%. A 620 profile reaches 70% up to $400,000. The program floor is 600. Second homes floor at 640, and investment lines floor at 700.

Always read the ceiling for the occupancy you are actually using.

What Structures Exist?

Two wholesale programs sit behind these lines, and each figure applies only within its own program’s terms. Both are standalone lines in first or second lien position.

Investment lines run the 5-year draw and 25-year repayment structure only. Payments float across both the draw and repayment periods and never convert to fixed. A quoted figure should always carry its own program’s draw and repayment structure. After closing, the minimum subsequent draw is $1,000 under the longer-runway program. Draw rules vary by program, so confirm them for your file.

Credit is read through a single-bureau score keyed to the primary wage earner. The report can be no more than 90 days old at closing. No rescores are run. Tradeline and housing-history standards vary by program. The longer-runway program wants two tradelines seasoned 12 months or one seasoned 24. It also requires clean housing history across all financed properties.

Where Does the General Rule Break?

The general rule is that equity in one home can fund a purchase. These edge cases are where it stops working.

The new house is held in an LLC. Equity lines in this network require title held by an individual borrower or a revocable living trust. Property already deeded to an LLC cannot carry the line. That file needs a vesting change, or a DSCR cash-out instead.

The collateral is a rental. Investment lines exist but are narrower: 70% CLTV, 700 minimum, $500,000 maximum. A borrower with a rental that fits those limits can use them. A rental with too little equity under the cap needs a different route.

The home is for sale. A property listed for sale, or listed within the past 60 days, is ineligible in several states.

The property type is off the list. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not eligible on either program. Condominiums, including non-warrantable ones, are eligible. Modular factory-built homes are eligible on the longer-runway program only.

Past credit events. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure history splits by program. One seasons a foreclosure in 7 years and a deed-in-lieu, pre-foreclosure, or short sale in 4. The other declines that history entirely.

Portfolio size. A borrower is limited to three lines. A borrower with more than 15 financed properties is not eligible.

Occupancy terms. The terms of some lines restrict renting out the home. A primary-residence line that funds a rental purchase is a normal use. Converting that home into a rental later can breach the terms.

The line is cut or the home is sold. The CFPB booklet on home equity lines notes that lenders may reduce your credit line if the home’s value falls. It also warns that opening a line puts your home at risk. If you sell the home, you generally must pay the line off in full.

What Does This Look Like With Percentages?

Take a borrower with a 720 credit profile and a primary residence. The first mortgage balance is 55% of the home’s value. The 90% CLTV tier leaves 35 points of value as draw room, and the 75% tier leaves 20 points. The line is capped at $500,000 under the higher tier.

Now the purchase side. Suppose the new house is a rental bought at 75% LTV, meaning a 25% down payment. The line has to cover that 25% plus closing costs. If the target price is large relative to the home’s value, the 20 or 35 points of draw room may fall short. In that case a smaller purchase, a higher credit tier, or a different equity source may be the better path.

The same arithmetic shows why drawing more than you need is a cost. At least 75% of the line is drawn at closing, so you carry interest on most of it from day one.

When the New House Is a Rental

A rental purchase needs both tests: enough equity and enough rental coverage. DSCR compares monthly rent with the full monthly obligation: principal, interest, taxes, insurance, and any HOA dues. Lendmire’s complete DSCR loans guide walks through the calculation.

Most DSCR purchase files land at 75%-80% LTV, which means 20%-25% down. Select programs reach 85% LTV with roughly a 700 or better score. A larger down payment lowers the loan amount and can lift the coverage ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.

Coverage of 1.00 is where many select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Reserves vary by lender, leverage, and loan size. Around 6 months of PITIA is common, and larger loans typically step up.

Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. The HELOC payment sits outside it too. The cleanest check is to run the deal two ways: on the property’s coverage, and on your personal cash flow with the line payment included.

Lendmire’s article Top DSCR HELOC Providers to Buy Investment Property Using Rental Equity covers the case where the equity sits in a rental you already own.

How Does a HELOC Compare With the Alternatives?

A DSCR cash-out refinance tops out around 75% LTV on standard rentals. About 6 months of seasoning is the common expectation. If the equity is in a rental, that route often fits better than a line.

A HELOC leaves the first mortgage untouched. It also adds a payment that floats, so the carrying cost can change after you buy. Some investors buy first and then refinance into a DSCR loan on the new property. Prepayment terms vary by program, so check them before planning a quick exit.

Who Should Skip This Strategy?

Skip it if the line payment would strain your own budget. You are putting your own home up as collateral. Skip it if the purchase lender will not count borrowed funds toward the down payment. Skip it if your credit profile caps your CLTV so low that the draw room cannot cover the down payment. Skip it if the new house has no equity cushion and the line funds the whole deal. In that case you hold no equity in the property.

Key Terms Defined

CLTV: Combined loan-to-value is your first mortgage plus the new line, divided by the home’s value.

Draw period: The stretch when you can borrow from the line, which is interest-only in these programs.

Repayment period: The stretch after the draw period when the balance amortizes and you can no longer borrow.

DSCR: Debt service coverage ratio is a rental property’s monthly rent divided by its full monthly obligation.

Seasoning: The time a property or credit event must age before it counts toward eligibility.

Next Steps

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Any calculator estimate is illustrative only. Every program figure is subject to lender guidelines and full file review, and nothing here is a commitment to lend.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and real estate investors in its 16 full-service states open home equity lines of credit arranged through wholesale lenders. Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB explainer on home equity lines

2. CFPB – What You Should Know About HELOCs (booklet)