Banks That Offer a HELOC to Buy a New Home Before Selling

The Quick Read: No fixed list of banks exists, because whether a lender will write a home equity line to fund your next purchase depends on which home secures the line, how much equity it holds, your credit profile, and whether that home is already listed for sale. Lendmire is a mortgage broker, so this page explains how the lenders in its wholesale network think rather than ranking institutions.

• Open the line on the home with the equity, before you list it. Many programs refuse a home that is listed or about to be.
• Lines on a primary residence are widely available. Lines on a rental are scarcer, smaller, and capped lower.
• The new lender decides whether borrowed money counts toward your down payment. Treatment varies by program.
• A line only supplies cash. It does not finance the new property, and it adds a payment you carry while both homes are owned.

What Does a HELOC Actually Do in a Buy-First Plan?

A home equity line of credit (HELOC) lets you borrow against the value of a home you already own, then use that cash toward the next purchase. When the old home sells, you repay the line from the proceeds.

Equity is the home’s value minus what you owe on it. The CFPB describes a HELOC as an open-end line you can borrow against repeatedly during a draw period, with variable pricing and payments that can change. If you already have a first mortgage, the line sits on top of it as a second payment.

Redfin’s buy-and-sell guide lists the usual ways to buy first: savings, a HELOC or bridge loan, or renting out the current home. A HELOC is the one that leaves your existing first mortgage alone, which is why people reach for it.

For an investor, the line has a second job. It can supply the down payment on a rental while your primary home is still on the market.

Which Types of Lenders Write This Kind of Line?

Primary-residence lines come from many places: depository banks, credit unions, online lenders, and mortgage companies. Rental-property lines come from far fewer. NerdWallet notes that a HELOC on an investment property is possible but comes with a smaller lender pool, lower borrowing amounts, and stricter terms.

Here is how the lender types differ and what to ask each one.

A broker that shops several wholesale lenders can match your file to the program that fits, instead of making you collect rejections one at a time. The best program for your situation turns on the property type, your credit profile, how much leverage you need, and how you document income. Lendmire’s HELOC placements are available in 16 full-service states (AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, WA). That footprint is narrower than the 41-market DSCR footprint, which covers 40 states plus Washington, D.C.

How Does Underwriting Treat the Line, Step by Step?

Underwriters judge two separate deals: the line on the old home, and the purchase of the new one. Here is the sequence.

1. Size the line. The lender measures combined loan-to-value (CLTV): your first mortgage plus the new line, divided by the home’s value. Credit score then sets the ceiling.

2. Check the home’s status. A home that is listed, or was listed recently, is ineligible in some states. Lenders treat a listing as a sign the home is about to leave your balance sheet.

3. Fund the line. Pricing floats throughout and never converts to fixed. Plan for any borrowed balance to carry a cost from the day it is drawn.

4. Document the draw. The purchase lender wants to see the closing papers and where the money landed in your account.

5. Qualify the new purchase on its own. For a rental bought with a DSCR loan, approval turns on the property’s rent against its own payment, not on the line.

6. Repay at sale. The CFPB’s HELOC booklet says you generally must pay the line off when you sell the home. It also says lenders can freeze or reduce a line if the home’s value falls.

That last point is the quiet risk. A line you counted on can shrink before you use it, so draw early and treat any undrawn balance as unreliable.

What Do the Network’s Programs Allow?

The ceilings depend on occupancy, and that matters more than any other variable. Use the row that matches the home securing the line.

The 90% figure exists only for 720-plus credit profiles, and only on a primary residence or second home. On an investment property, 70% CLTV is the ceiling with no tier above it. Market surveys differ: NerdWallet reports market-wide maximums up to 80% on investment-property lines, with many lenders below that. The network’s figure for an investment line is 70%.

Other parameters worth knowing, all subject to lender guidelines and full file review:

• Credit: The table shows only the top tiers. On primary residences the program floor is 600, and lower tiers carry lower leverage and smaller lines. Second homes start at 640, and investment lines at 700.
• Line size: $25,000 to $750,000 in most states. Anything above $500,000 is primary-residence only, needs a 700 or better credit profile (720 on the longer-runway structure), caps at 75% CLTV, and requires a full appraisal.
• Draw structures: Primary residences and second homes can use either a 3-year interest-only draw with a 17-year repayment period, or a 5-year draw with a 25-year repayment period. Investment lines use the 5-year draw only. Pricing floats throughout and never converts to fixed.
• Valuation: Lines at or below $500,000 ordinarily use an automated valuation instead of a traditional appraisal.
• DTI: Debt-to-income tops out at 50%, and is qualified on the interest-only payment calculated on the maximum draw.
• Property types: Single-family, 2-4 units, PUDs, townhomes, and condos, including non-warrantable ones. Manufactured homes, co-ops, condotels, log homes, and commercial or agricultural properties are not eligible.

Where Does the General Rule Break?

A few edge cases change the answer entirely.

Listed homes. A property that is listed for sale, or was listed within the past 60 days, is ineligible in Indiana, North Carolina, Pennsylvania, Tennessee, Texas, and Washington. Other states vary by program. Open the line first.

LLC-owned homes. The line must be held by you personally or by a revocable living trust. LLCs, corporations, partnerships, and irrevocable or land trusts cannot hold title. This is the sharpest difference from a DSCR loan, which can close in an LLC subject to lender program eligibility. A home already deeded to an LLC needs a vesting change, or a DSCR cash-out instead.

Borrowed down payments. Some DSCR programs accept line proceeds as the down payment and some do not. A line drawn and seasoned in your account is also treated differently from a second lien closing the same day as the purchase. Ask the purchase lender before you open the line, not after.

Exposure limits. A borrower is limited to three lines. Combined exposure caps at $2,000,000 on the higher-leverage program and $750,000 on the longer-runway program. Owning more than 15 financed properties makes you ineligible.

The old home that will not sell. Benzinga points out that you may carry three payments at once: the first mortgage, the line, and the new mortgage. Missing payments on the line puts the home securing it at risk. This is the failure mode to plan around.

Keeping the old home as a rental. The line stays in place and gets paid from rent or cash flow. At that point it is an investment-property line, with the tighter 70% CLTV ceiling and 700 minimum credit.

How Does the New Rental Purchase Fit?

The new property is a separate loan, and a DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR (debt service coverage ratio) is monthly rent divided by the full monthly payment: principal, interest, taxes, insurance, and any HOA dues.

Across the network, purchase leverage usually lands at 75% to 80% LTV, which means 20% to 25% down. Select high-leverage programs reach 85% LTV (15% down), generally with a score near 700 or better. Most programs want around a 660 credit score, and a 620 floor exists in parts of the network. Reserves commonly run around 6 months of PITIA (principal, interest, taxes, insurance, and association dues), though that varies by lender, leverage, and loan size.

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. Manufactured homes, log homes, and barndominiums are not offered on DSCR loans.

Here is the catch most borrowers miss. The line’s payment never enters the DSCR ratio, but it still leaves your bank account. Clearing 1.00 does not mean positive cash flow, since repairs, vacancy, management, and capex sit outside the calculation. A rental that covers its own payment can still strain you if the line’s payment sits on top.

Picture an investor whose primary home sits at about 55% combined leverage. With a 720 score on a primary residence, the line could take that stack as high as 90% CLTV, though the line would then be capped at $500,000. At the 75% tier, which allows a line up to $750,000, roughly 20 points of home value is the most the line can add. If the target rental is bought at 75% LTV, the line has to cover the 25% down, closing costs, and reserves, with room to spare. If it cannot, the plan needs more equity or a smaller property. The calculator on this site can turn percentages into illustrative dollars. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

A bigger line makes the purchase easier but leaves less cushion if the old home lingers. The sturdier play is often the smaller line and the smaller purchase, even though it gives up some leverage.

For the full picture of how these loans work, see the complete DSCR loans guide.

How Does a HELOC Compare With Other Buy-First Options?

Each fits a different borrower. Someone with a low first mortgage and strong equity often prefers the line. Someone who needs a large sum at once may lean toward a cash-out refinance. Lendmire compares these paths in its guide to the best HELOC program to buy a new home before selling.

Who Should Skip This Plan?

Skip it if you cannot carry all payments for several months, if your old home is not in sellable shape, or if the equity is thin. Also skip it if your property is titled in an LLC, or if your target lender will not accept borrowed funds. A line fits a short hold or bridge better than permanent financing, since the cost floats and the line is meant to be repaid.

Key Terms Defined

HELOC: A revolving line of credit secured by the equity in a home you own.

CLTV (combined loan-to-value): Your first mortgage plus the new line, divided by the home’s value.

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

DSCR: A property’s monthly rent divided by its full monthly payment, used to qualify rental purchases.

Reserves: Liquid savings a lender wants left after closing, counted in months of payments.

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. Every figure above is subject to lender guidelines and full file review, and nothing here is a commitment to lend.

Equity is only useful if the old home actually sells, and a patient exit plan is worth more than the extra leverage.

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 – What is a HELOC

2. Redfin – Buy and sell guide

3. NerdWallet – HELOC on an investment property

4. CFPB HELOC booklet

5. Benzinga – HELOC for a down payment