The Quick Read: A bank can supply the cash for a down payment through a home equity line, but the lender financing the purchase decides whether borrowed money counts, so you need two separate approvals, a line that is open and drawn before the purchase file is underwritten, and a rental whose own income supports the new loan.
- The home equity line only supplies cash. A separate purchase loan buys the property.
- On the Lendmire network, an investment-property line tops out at 70% CLTV (combined loan-to-value). Primary-residence and second-home lines reach 90% CLTV only at a 720-or-better credit profile.
- DSCR purchase loans typically run 75%-80% LTV, so the cash you need to raise is usually 20%-25% of the price.
- The line payment sits outside the DSCR ratio, but your own cash flow still has to pay it.
Which Banks Offer a HELOC to Cover a Down Payment Before Closing?
The lenders that write this depend on the collateral, your credit profile, and how much equity you hold. This article names no banks, because a list would go stale and would not tell you whether a given lender fits your file.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
Four kinds of lenders write home equity lines: big banks, community banks, credit unions, and specialty home equity lenders. Almost all of them will lend against a primary residence. Fewer will lend against a rental. White Coat Investor reports that lines on investment property are harder to get, because lenders see more default risk. Benzinga says the same: availability is limited, and lenders view investment collateral as riskier.
Lendmire is a mortgage broker, not a lender. It places home equity lines with select wholesale lenders in its network, which lets one application be matched against several sets of guidelines. The right program for your situation turns on property type, credit, leverage, and the state where the collateral sits. Lendmire’s home equity lines are available in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than the DSCR footprint.
Occupancy changes the answer more than anything else, so here is how the network treats each type of collateral:
| Collateral | Max CLTV | Min credit | Max line |
|---|---|---|---|
| Primary residence | 90% (720+ only) | 600 | $500,000 at 90% CLTV; $750,000 at 75% CLTV, 700+ (720 on the longer-runway program) |
| Second home | 90% (720+ only) | 640 | $500,000 |
| Investment property | 70% | 700 | $500,000 |
Lower credit tiers carry lower ceilings. A primary-residence line at 680 credit, for example, tops out at 85% CLTV.
Key Terms Defined
Home equity line of credit (HELOC): a revolving credit line secured by property, which you draw up to a set limit.
CLTV (combined loan-to-value): all loans against a property added together, divided by its value.
Draw period: the stretch when you can pull money from the line, usually paying interest only.
Second lien: a loan that sits behind the first mortgage and is repaid after it.
DSCR (debt service coverage ratio): monthly rent divided by the property’s full monthly payment.
PITIA: principal, interest, taxes, insurance, and any association dues, which together make up that payment.
Seasoning (of funds): how long money has sat in your account, which lets an underwriter trace where it came from.
Reserves: liquid savings a purchase lender wants left over after closing.
How the Two Approvals Work, Step by Step
The home equity lender and the purchase lender never share a decision. Each reviews its own loan, and neither guarantees the other.
1. Open the line before you need it. The line has to exist and be drawable before the purchase file is underwritten. The federal consumer-finance regulator’s HELOC booklet explains that once a line is approved, you can generally spend up to your credit limit. It also explains that the line has a draw period and a repayment period, and that pricing is usually variable.
2. The equity lender qualifies you and the collateral. The equity in the property limits the line. SmartAsset says the amount of equity caps how much a HELOC can provide.
3. Draw the funds into your own account. Purchase underwriters trace where down payment money came from, so a clean deposit from your own line shows up clearly in your statements.
4. Document the draw. Expect to hand over the line’s terms, the draw record, and statements showing the deposit. Some purchase lenders want funds to sit in your account for a period before they count.
5. Wire the funds to escrow or title.
6. The purchase loan is underwritten on its own terms. On a DSCR loan, the file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Credit and an appraisal with a rent schedule round it out.
7. Keep your credit profile still. Opening a new line in the middle of a purchase file adds debt and an inquiry. The purchase lender may re-verify your credit profile as a result.
What Does the Home Equity Lender Look For?
Across the network, the home equity side comes down to credit, debt load, valuation, and how the property is titled.
- Credit: The program floor is 600 on primary residences, 640 on second homes, and 700 on investment property. A line above $500,000 is available on a primary residence only, and it requires at least a 700 credit profile (720 on the longer-runway structure) and caps at 75% CLTV.
- Debt-to-income: The maximum ratio is 50%, dropping to 45% for credit profiles from 600 to 679. The lender reviews your file on the interest-only payment calculated on the maximum draw, so a big line weighs on the ratio even if you plan to use a small slice.
- Valuation: Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal. Every line above $500,000 requires a full appraisal.
- Structure: An investment line runs a 5-year interest-only draw followed by a 25-year repayment. Primary and second-home lines can also use a 3-year draw with a 17-year repayment. Pricing floats during both periods and never converts to fixed.
- Draw at closing: At least 75% of the line is drawn when the line closes, and that draw is what puts the cash in your account before the purchase file is underwritten. A $1,000 minimum applies to later draws on the longer structure. Because most of the line is drawn up front, size the line close to your actual cash need rather than planning to draw only a small slice.
- Title: The individual borrower or a revocable living trust must hold title. LLCs, corporations, and partnerships cannot hold title on a line. A property already deeded to an LLC needs a vesting change first, or a DSCR cash-out refinance instead.
- Exposure: A borrower is limited to three lines and cannot own more than 15 financed properties.
- Property types: Single-family, 2-4 units, PUDs, townhomes, and condominiums, including non-warrantable condos, are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural properties are not.
What Does the Purchase Lender Look For?
The purchase lender cares about the rental. Most DSCR purchase programs in the network land at 75%-80% LTV, which means 20%-25% down. Select programs reach 85% LTV (15% down) with roughly a 700+ credit score. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Coverage starts at 1.00 on select programs, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Most programs want around 660 credit, and a 620 floor exists in parts of the network. Reserves vary by lender, leverage, and loan size, and are commonly around 6 months of PITIA. The complete DSCR loans guide covers each of these in depth.
Here is the piece many first-time investors miss: a bigger down payment does not erase leverage caps, credit floors, or reserve rules. The strongest files clear two tests at once. You need enough equity to fund the cash, and the rent has to cover the new loan.
Borrowed down payment money is where programs differ most. Some accept a fully borrowed down payment. Some cap the borrowed share. Some want part of the cash to be your own. Get the purchase lender’s policy in writing before you draw anything.
A Worked Example in Percentages
Run the numbers this way, using modeled assumptions and no real listing. You want a rental on a DSCR purchase at 75% LTV, so you need 25% of the price in cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Your primary residence has a first mortgage equal to 50% of its value. Your credit profile is 720 or better. The 90% CLTV ceiling leaves 40% of the home’s value as available room.
The down payment fits if 25% of the rental’s price is no more than 40% of your home’s value. In plain terms, the rental can cost up to about 1.6 times your home’s value before the equity runs out.
Now flip it. Suppose you pull the cash from an existing rental instead. That is an investment-property line, capped at 70% CLTV with a 700 minimum credit score. If that rental already carries a first mortgage at 65% of its value, only 5% of its value is left. That room covers very little of a 25% down payment. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Same investor, same target. The collateral you pick can decide whether the plan works at all.
Now test the new rental. Say rent covers the new loan’s full payment at roughly 1.2x. That clears the DSCR test on programs that start at 1.00. It says nothing about the line payment. That payment is paid out of your pocket, and it floats.
DSCR compares rent to PITIA only. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, utilities, and capital expenses all sit outside the ratio.
Where the General Rule Breaks
Fully borrowed down payment. Some programs accept it and some do not, as covered above. No outside rule settles it, so the purchase lender’s written policy is the only answer that matters.
Down payment, closing costs, and reserves are separate pots. A lender may accept borrowed funds for one and exclude them from another. Many purchase programs exclude borrowed funds from reserves. If you draw only enough for the down payment, you may still need your own savings to meet the reserve requirement. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Investment collateral is hard to find. On the Lendmire network, an investment-property line needs a 700 credit profile and caps at 70% CLTV and $500,000. Banks.com notes it is not uncommon for investors to use a HELOC toward a down payment or loan costs. Plenty of lenders still decline the investment-property version.
A larger line is primary-residence only. A line above $500,000 requires a primary residence and a full appraisal, and it caps at 75% CLTV. The $500,000 lines at 90% CLTV are a separate tier, and they need a 720-or-better credit profile.
Gift versus loan. A HELOC draw is borrowed money. If a relative draws on their own line to help you, that is a loan unless there is truly no repayment expectation. Many programs prohibit borrowed down payments from relatives, and a gift letter has to be accurate. Never label a loan as a gift.
Frozen or reduced lines. Read your line agreement for the conditions under which a lender can suspend or reduce it. Once the money is drawn and sitting in your account, that risk is behind you. That is one reason to draw before you make offers.
An LLC buyer. DSCR loans to LLC-titled borrowers are available subject to program terms. The equity line is a different story, since LLCs cannot hold title on it. The line must be in your personal name or a revocable living trust.
What Does the Decision Look Like in Practice?
You are choosing among cash sources, and each costs something different. A line preserves your savings, which SmartAsset notes can double as an emergency fund. The cost is a floating payment that never converts to fixed.
The risk lands on the collateral. Missed payments on a line against your primary home can put that home at risk of foreclosure. Benzinga says you must be able to carry your primary mortgage, the line interest, and the new mortgage together. The same logic applies when a rental is the collateral.
Stress-test before you draw. Assume the line payment rises as pricing floats, assume a vacancy stretch on the new rental, and see whether your own income still carries all of it. This is a genuine judgment call. A thin cushion on a leveraged purchase is where a good-looking rental becomes a cash drain.
Scaling is the other question. A line has a ceiling, and a borrower is capped at three lines. A DSCR cash-out refinance is the alternative to weigh if you plan several purchases. That product tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation.
| Cash source | Payment style | Main limit |
|---|---|---|
| HELOC on your home | Floating, then amortizing | Equity and CLTV ceiling |
| HELOC on a rental | Floating, then amortizing | 70% CLTV, 700+ credit |
| Home equity loan | Fixed, predictable | Equity and DTI |
| DSCR cash-out refinance | Set by the new loan | About 75% LTV, seasoning |
Questions to Ask Before You Draw
- Does the purchase program accept borrowed down payment funds, and is there a cap on the borrowed share?
- Do borrowed funds count toward closing costs, reserves, or neither?
- Must the funds be seasoned in my account first, and for how long?
- Will opening a new line trigger a fresh credit review?
- Will the equity lender lend against my property type and title structure?
- What does my total monthly obligation look like if the line payment rises?
Lendmire’s piece Best HELOC Program to Cover a Down Payment Before Closing goes deeper on matching programs to borrower profiles.
Frequently Asked Questions
Which banks will give me a HELOC for a down payment?
Large banks, community banks, and credit unions all write lines, but policies on investment collateral and borrowed-funds use differ widely. Lines against a primary residence are the easiest to find. A broker that places lines with several wholesale lenders can match your credit, equity, and property type to the right guidelines.
Will my purchase lender accept HELOC money as a down payment?
It depends on the purchase program. The equity lender only supplies cash, and the purchase lender decides whether borrowed money counts. Some programs accept it, some cap the borrowed share, and some want part of the cash unborrowed. Get the answer in writing before you draw.
Does the HELOC payment count against my DSCR?
Generally no. The ratio compares the property’s rent to its own PITIA. The line payment still has to be paid from your income, and the equity lender counts it in your debt-to-income ratio at the line stage.
Should I borrow against my home or against a rental?
Your home usually gives you more room. On the Lendmire network, a primary-residence or second-home line can reach 90% CLTV, but only at 720 credit or better. An investment-property line caps at 70% CLTV with a 700 minimum score. Running both in a worked example, as above, shows which one leaves enough room.
Can a family member’s HELOC count as a gift?
No, not unless there is truly no expectation of repayment. A draw on their line is borrowed money, and many programs prohibit a borrowed down payment. A gift letter must describe the money accurately.
Confirm the purchase lender’s policy on borrowed funds before you draw on the line, since that answer shapes the rest of the sequence.
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. Lendmire also arranges DSCR investor loans across 40 states plus Washington, D.C. Call 828-256-2183 to talk through your scenario.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and real estate investors in its 16 full-service states. Home equity lines of credit are arranged through wholesale lending channels; Lendmire brokers the line and the lender underwrites each application under its occupancy-based guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. White Coat Investor – HELOC on investment property
2. Benzinga
4. SmartAsset – HELOC for a down payment
5. Banks.com – HELOC to buy investment property
6. Benzinga – Can you use a HELOC for a down payment
This article is part of Lendmire’s HELOC & home equity loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Banks That Offer a DSCR HELOC for a Down Payment on Your Next Home · Banks That Offer a DSCR HELOC on a Non-Warrantable Condo · Banks That Offer an Investment Property HELOC With Approval Before an Appraisal
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.