Banks That Offer a HELOC to Fund the Down Payment Before Selling Your Current Home

The Quick Read: A HELOC (a revolving credit line secured by your home) on the home you plan to sell can supply cash for the next down payment, but only through a lender that accepts borrowed funds, and only if you open the line before the home is listed. Which lender fits depends on occupancy, credit, equity, and listing status, so any fixed list of banks goes stale. Lendmire is a mortgage broker, not a lender, and it matches the file to a wholesale lender rather than naming one.

• On a primary residence, lines in Lendmire’s network reach 90% combined loan-to-value (CLTV) only at a 720 or better credit profile, and only on lines up to $500,000. Primary-residence lines can run as high as $750,000, but above $500,000 the cap drops to 75% CLTV.
• On an investment property, the ceiling is 70% CLTV with a 700 minimum score and a $500,000 maximum line.
• A line that stays open after the sale is generally not an option, because the sale pays it off.
• Your next purchase still has to qualify on its own. For a rental, that usually means rent that covers the payment, subject to lender guidelines.

How the Strategy Works, Step by Step

You open a line against the home you own, draw cash, move it into your own account, and use it toward the next purchase. Repayment comes from the eventual sale of the old home. Each step has a gate, and a miss at any one stalls the plan.

1. Open the line before you list. A HELOC is its own loan with its own approval. Apply while the home is still simply your home.

2. Draw and deposit the cash. Bankrate advises depositing equity funds well before the mortgage application. That gives the money time to season in your account and lets the new debt show on your credit report.

3. Ask the purchase lender about borrowed funds first. Ask separately about the down payment, closing costs, and reserves. Some lenders treat those three differently.

4. Document the source. Keep the line agreement, the draw statement, and the deposit record together.

5. Qualify the purchase. What counts depends on the product. A debt-to-income (DTI) loan counts your existing mortgage, the line payment, and the new payment. A DSCR loan looks at the new property’s rent against its own payment.

6. Close on the new property, then sell the old one. Proceeds at that closing clear the first mortgage and the line together.

NerdWallet lists a HELOC on the current home as one way to get down payment cash before the sale closes. It also warns that without a sale contingency you could carry the mortgage and upkeep on two homes at once.

Four gates decide the outcome:

• Enough equity.
• A line approved before listing.
• A purchase lender that accepts the funds.
• Cash flow that survives carrying everything until the sale.

Which Banks Offer a HELOC to Fund the Down Payment Before Selling Your Current Home?

No ranked list of banks holds up, because availability changes by institution, by property type, and over time. Lender types behave differently, though. The useful move is to screen any lender on a short set of criteria.

Large retail banks, local banks and credit unions, and online lenders all write home equity lines. Their appetite differs. Availability on investment-property lines in particular shifts from one institution to the next, so check each one directly. Bankrate notes that not every mortgage lender will let you put home equity money toward a new home you finance.

A broker approaches the search differently. Lendmire works with a network of wholesale HELOC lenders and matches the property, equity, credit profile, and goal to the program that fits. The best program for your situation depends on occupancy, score, leverage, and listing status. HELOC availability through Lendmire runs in 16 full-service states, which is narrower than its DSCR footprint of 41 markets, including Washington, D.C.

What Network Lines Look Like

Lendmire places files with two wholesale programs. One runs a 3-year interest-only draw, then a 17-year repayment period. The other runs a 5-year draw, then a 25-year repayment period. This article calls them the 3-year-draw program and the 5-year-draw program. Both are standalone lines in first or second lien position, subject to lender guidelines and full file review.

Limits depend on how you use the home, so match the column to your actual occupancy:

Several other terms shape a down-payment plan:

• Credit tiers step the ceiling down. On a primary residence, a 700 profile reaches 85% CLTV up to $500,000, and 660 does too. A 640 profile reaches 80%. Profiles at 620 and 600 fall further, to 70% and 60% CLTV, on lines up to $400,000. Above $500,000 the line is primary-residence only and caps at 75% CLTV. It needs a full appraisal and a credit profile of 700 or better (720 on the 5-year-draw program).
• Line size runs $25,000 to $750,000, with a lower floor in one state. At least 75% of the line is drawn at closing. Size the line to the cash you need, because a large unused line still means drawn interest from day one.
• Pricing floats and never converts to fixed. That holds through both the draw period and the repayment period.
• DTI tops out at 50%. It drops to 45% for scores from 600 to 679. Lenders review your file on the interest-only payment at the maximum draw, so the line itself must fit your debt load.
• Valuation is usually automated on lines at or below $500,000. A full appraisal is required above that, and you can request one anyway.
• Title must sit with you or your revocable living trust. LLCs, corporations, and partnerships cannot hold title to the line, which is the sharpest difference from a DSCR loan.
• Property types are broad but not unlimited. Single-family, 2-4 units, PUDs, townhomes, and condos, including non-warrantable condos, are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not.
• Exposure caps apply. A borrower may hold up to three lines. Anyone with more than 15 financed properties is not eligible.

Where the General Rule Breaks

The sequence above works when the home is unlisted and the purchase lender accepts the funds. These edge cases are where plans stall.

The home is already listed. This is the most common wall. In several of the states where the network operates, a property that is listed for sale, or was listed within the past 60 days, is ineligible for the line. Elsewhere, individual lenders set their own policy. Apply before you list.

The purchase lender dislikes borrowed funds. Acceptance is lender-specific. Some lenders treat a secured draw as a legitimate source, and others want the cash to season first. Reserves are often the harder case, because lenders may want those assets unborrowed. Ask before you draw, not after.

You keep the old home and rent it out. Occupancy changes the program. A line on a rental follows the investment column: 70% CLTV, a 700 minimum score, and a $500,000 maximum. Check the line agreement as well, since some HELOC contracts restrict renting the home out.

The sale slips. The CFPB describes a HELOC as an open-end line you can draw against during a draw period, followed by repayment. It also warns that falling behind could cost you your home. Its HELOC booklet says a sale generally requires full payoff, and that a lender can reduce your line if the home’s value drops. A softening market can shrink a planned draw.

Your exit is a refinance. If you plan to buy with a DSCR loan and refinance to repay the line, check the purchase loan’s prepayment penalty terms first. A penalty can erase the savings from an early refinance.

Alternatives exist. NerdWallet describes a bridge loan, which can pay off the old mortgage and put the remainder toward the next down payment. A cash-out refinance on the old home avoids a second lien, but it replaces the first mortgage.

How a DSCR Lender Sees the Money

For a rental purchase, the DSCR loan compares rent to the property’s own PITIA: principal, interest, taxes, insurance, and association dues. The qualifying ratio does not include the HELOC payment. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. That is why investors with a high DTI look at this route.

The ratio is only one test, though. The money is still debt, you still have to carry it, and a lender may ask where the down payment came from. Treat acceptance of HELOC funds as a lender-level question and ask it early.

Across the wholesale network Lendmire works with, typical DSCR parameters look like this. Each is subject to lender guidelines and varies by file:

• Purchase leverage: most files land at 75%-80% LTV on a purchase. Select programs reach 85% LTV with roughly a 700+ score.
• Cash-out refinance: about 75% LTV on a cash-out refinance, with roughly six months of seasoning as the common expectation.
• Coverage: 1.00 is where select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
• Credit: a 620 floor exists in parts of the network. Most programs want around 660, and 700+ opens the strongest leverage tiers.
• Reserves: commonly around six months of PITIA. Conservative files at modest leverage can see reserves waived, and larger loans typically step up.

A larger down payment lowers the monthly obligation and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.

One caution. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. Your own budget has to cover them, along with the line’s floating payment.

One structural limit applies to the HELOC itself: it cannot be held by an LLC. If your current home already sits in an LLC, the line needs a vesting change first. Lendmire’s complete DSCR loans guide walks through the loan side in full.

A Modeled Walkthrough

Run the numbers on an investor with a 700 credit profile, a primary residence, and a first mortgage equal to about 50% of the home’s value. These are modeled assumptions, not market data.

At 700, the primary-residence matrix allows up to 85% CLTV on lines up to $500,000. Equity room is therefore around 35% of the home’s value, before the line-size cap, DTI, and valuation. The investor wants a rental at 25% down, so the line must cover that percentage of the price plus closing costs. Reserves need to come from separate, unborrowed money if the purchase lender requires it. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

The rental clears about 1.15x on rent against its own PITIA. That passes a 1.00 floor, but it leaves a thin cushion for vacancy and repairs. Meanwhile the investor carries the old first mortgage, the line’s floating payment, and the new loan until the sale closes.

This works when the old home sells on time and the cushion holds. It strains when the sale drags. That is the right stress test: price the sale slipping, not just closing on schedule.

Good Fit vs. Walk Away

A fully borrowed down payment leaves you heavily leveraged across two separate loans. The money moves; it does not disappear. For a related path on the next primary home, see Lendmire’s piece Banks That Offer a Bank Statement HELOC to Cover the Down Payment on Your Next Home.

Key Terms Defined

• 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 paying interest only.
• Second lien: a loan that sits behind your first mortgage and is repaid after it in a sale.
• Seasoning: the time money sits in your account, or a loan stays in place, before a lender counts it.
• PITIA: principal, interest, taxes, insurance, and association dues on a property.
• DSCR (debt service coverage ratio): monthly rent divided by the property’s PITIA.
• Bridge loan: short-term financing that carries you between buying one home and selling another.

Next Step

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. Reach the team at 828-256-2183. Program terms are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

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. Bankrate – Buy a house with home equity

2. NerdWallet – Buy a home while selling

3. CFPB

4. CFPB HELOC booklet