Top HELOC Providers to Fund the Down Payment Before Selling Your Current Home

The Quick Read: The right provider is the one whose program fits your equity, credit profile, and timing, and a broker matches that fit across several wholesale lenders instead of naming one winner. A home equity line on the house you are leaving gives you cash for the next purchase before the sale closes. The purchase lender then decides whether that cash counts as an acceptable down payment source.

• Open the line before you list the current home. Several states bar lines on a property that is listed or was listed in the last 60 days.
• On the network Lendmire works with, a primary-residence line reaches 90% CLTV only at a 720-or-better credit profile. An investment-property line stops at 70% CLTV.
• The line is variable-rate and never converts to fixed on these programs, so your payment can change over time.
• A DSCR purchase compares the new property’s rent to that property’s own PITIA. The HELOC payment sits outside that ratio but still hits your bank account.
• Confirm in writing that the purchase lender accepts borrowed funds for the down payment, and separately for closing costs and reserves.

What Makes a HELOC Provider the Right One for This Move?

The best provider depends on your situation: the occupancy of the home securing the line, your credit profile, how much cash you need, and whether the house is already listed. No single lender is best for every file. Lendmire is a mortgage broker, not a lender, so it does not rank or recommend any bank or credit union. It works with a network of wholesale HELOC lenders and matches the scenario to the program that fits.

Six traits matter most for a buy-before-you-sell plan:

1. Listing rules. Does the lender write a line on a home that is listed or about to be listed?

2. Leverage ceiling. What combined loan-to-value (CLTV) does the lender allow at your credit tier?

3. Draw structure. How long is the interest-only draw period, and what does repayment look like afterward?

4. First-draw rules. How much must you draw at closing, and what is the minimum draw after that?

5. Title and vesting. Can the lender lend against how the home is titled today?

6. Valuation method. Does the line use an automated valuation or a full appraisal?

How the Strategy Works, Step by Step

The sequence matters more than the product. Do these steps in this order.

1. Open the line before you list. The line is underwritten to you personally: credit, income, and equity (value minus all liens). Lenders are generally more comfortable lending against a home that is not on the market, and some states rule out listed homes entirely.

2. Size the line. Cover the down payment, closing costs, and a cushion. Do not take the maximum your equity allows. On the programs Lendmire places, at least 75% of the line is drawn at closing, so an oversized line means interest on money you do not need.

3. Draw and move the money. Transfer the draw into your own bank account before you sign the purchase contract. That leaves a clean paper trail from the line to the account to the closing table.

4. Disclose the source to the purchase lender before you go under contract. Down payment, closing costs, and reserves are three separate tests. Borrowed funds may count toward one and not the others.

5. Get the purchase underwritten. On a DSCR purchase, the lender tests the new property’s rent against its own PITIA. On a loan that uses debt-to-income (DTI), the HELOC payment counts as a personal liability.

6. Plan the exit. If you sell the house that secures the line, the sale proceeds pay it off at closing. If you keep the house as a rental, the line stays open and you keep paying it.

What the Network’s HELOC Programs Allow

The lines in Lendmire’s wholesale network are standalone lines in first or second lien position. Ceilings depend on occupancy and credit, so they cannot be quoted as one number. Every figure below is subject to lender guidelines and full file review.

Lower credit tiers step the ceiling down. A primary residence at 640 reaches 80% CLTV, and the program floor is a 600 credit profile. Second homes floor at 640. Investment lines floor at 700.

Two draw structures exist on primary residences and second homes. One has a 3-year interest-only draw and a 17-year repayment. The second is a 5-year interest-only draw followed by a 25-year fully amortizing repayment. Investment lines run only the 5-year draw and 25-year repayment. Pricing floats through both the draw and repayment periods and never converts to fixed.

Only primary residences can carry a line above $500,000, which is why the $750,000 row in the table is the 75% CLTV tier. Such a line needs a credit profile of 700 or better (720 on the longer-runway structure) and requires a full appraisal. The 90% CLTV ceiling does not apply above $500,000. Lines at or below $500,000 ordinarily use an automated valuation, though a higher CLTV may require a second valuation. DTI tops out at 50%, and the line is qualified on the interest-only payment calculated on the maximum draw.

A borrower is limited to three lines, and an owner of more than 15 financed properties is not eligible.

How the Purchase Lender Treats HELOC Money

The HELOC does not restrict how you spend the money. The lender financing the new home sets the source-of-funds rule. That rule varies by lender and program, so ask before you sign a contract.

The CFPB’s HELOC explainer defines the product as an open-end line you can borrow against repeatedly. It gives a 10-year draw period as an example and notes repayment periods of ten or 20 years. Payments often rise significantly when repayment begins, and the rate is usually variable. Some plans convert part of the balance to a fixed rate. The lines in Lendmire’s network do not.

Agency loans are more permissive on paper. Fannie Mae’s Selling Guide on borrowed funds treats funds secured by an asset as acceptable for down payment, closing costs, and reserves. DSCR loans are not agency products, so each program sets its own rule.

Here is the practical split:

• DSCR purchase. The ratio is monthly rent divided by the property’s PITIA. The departing home’s HELOC payment is not in that number. That does not make the deal cash-flow positive. Repairs, vacancy, management, utilities, and capex all sit outside the ratio.
• DTI-based loan. The HELOC payment counts as a monthly liability.
• Reserves. Some lenders may exclude borrowed funds here even when they accept them for the down payment. Ask the lender to confirm which funds count toward which test.

On the DSCR side of the purchase, leverage commonly runs at 75% to 80% LTV on a purchase, which means 20% to 25% down, though it varies by lender. Select programs reach 85% LTV on a purchase with roughly a 700+ score. Coverage of 1.00 is where select programs start. Stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. The complete DSCR loans guide covers the full structure.

Where the General Rule Breaks

Five edge cases change the plan.

The listing ban. A property listed for sale, or listed within the past 60 days, is ineligible for the line in NC, PA, TN, TX, and WA. In those states the line must be open before the listing agreement is signed.

Availability. HELOC placement runs through Lendmire’s 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than the 41-market DSCR footprint, which covers 40 states plus Washington, D.C.

Texas. A Texas primary residence is a homestead and caps at 80% combined loan-to-value. It also carries a 12-day waiting period, a one-lien-at-a-time rule, and 12-month seasoning. Texas second homes and investment properties are eligible as non-homestead transactions. Texas properties are limited to 10 acres.

Title and vesting. The borrower must hold title individually or in a revocable living trust. An LLC, corporation, partnership, or irrevocable, blind, or land trust cannot hold title. A rental already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead.

Property type. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not eligible. Single-family, 2-4 unit, PUD, townhome, and condominium (including non-warrantable) properties are.

A fully borrowed down payment is the highest-risk version of this plan. Programs differ on whether they accept it, cap the borrowed share, or want some of the cash unborrowed. Raise it before the offer, not after.

A line on a rental instead of a primary home is possible. The investment-property ceiling is 70% CLTV, the minimum credit profile is 700, and the line caps at $500,000.

A Worked Scenario in Percentages

Consider an investor buying a rental with a DSCR loan at 75% LTV on a purchase. That leaves 25% down plus closing costs, all funded by a line on the departing primary home. The line must cover those costs and still leave a cushion. Every figure here varies by lender and program, because guidelines, property type, leverage, and credit profile all apply.

Stack the two loans and the new property is financed near 100% of the price. The house being sold still carries its own first mortgage. The DSCR test compares the new property’s rent to its own PITIA, and the file passes only if that coverage meets the lender’s minimum. The investor is therefore carrying three obligations at once: the old mortgage, the line, and the new loan. A passing DSCR does not settle the question, because the investor’s own cash flow decides whether the plan is safe.

Now run the same file at 80% LTV on a purchase. The down payment shrinks to 20%, so the line needs to cover less cash. The loan is larger, though, which makes the coverage ratio thinner. A larger down payment lowers the monthly payment and can lift the DSCR. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.

Alternatives to Compare

On DSCR cash-out refinances, leverage tops out around 75% LTV across most of the network, and about 6 months of seasoning is the common expectation. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.

Key Terms Defined

HELOC: A home equity line of credit, which lets you borrow against your equity repeatedly up to a limit.

CLTV: Combined loan-to-value, meaning all liens on the home added together and divided by its value.

Draw period: The stretch when you can borrow from the line, usually with interest-only payments.

PITIA: Principal, interest, taxes, insurance, and any association dues on a property.

DSCR: The debt service coverage ratio, which is monthly rent divided by the property’s PITIA.

When the Plan Fits and When It Does Not

It fits when you have real equity, a stable credit profile, enough cash flow to carry three payments, and a purchase lender that accepts borrowed funds. It also fits when you want to write an offer without a home-sale contingency.

It does not fit when the payment cushion is thin, the home is already listed in a restricted state, or the title is held in an LLC. It also fits poorly when you plan a long hold on a variable-rate line. The rent does not adjust when the HELOC rate does, so a hold of many years leaves you exposed.

For a second angle on equity-line use, see Lendmire’s piece Top HELOC Providers to Gift a Child a First-Home Down Payment.

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. Call 828-256-2183.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, and every line is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB’s HELOC explainer

2. Fannie Mae Selling Guide B3-4.3-15