HELOC on Investment Property: Requirements and Limits
Yes, you can get a HELOC on a rental property. Fewer lenders offer one, the limits are lower than on your own home and the rate is usually higher. Here's how it works and how to qualify.
At a glance
- Max CLTV: commonly about 70% to 80%, depending on credit, property and program.
- Credit: 680+ opens the most options.
- Title: most programs require your name or a revocable trust, not an LLC.
- Speed: no three-day cancellation period, so funding can move faster than on a primary home.
Why fewer lenders offer rental property HELOCs
When money gets tight, people protect the house they live in first. Lenders know that, so they treat a lien on a rental as higher risk and price it that way. Many banks don't offer investment property HELOCs at all, and the ones that do usually set lower limits and want stronger credit and reserves.
Primary vs. second home vs. investment property
| Primary home | Second home | Investment property | |
|---|---|---|---|
| Common max CLTV | 80%–90% | 75%–85% | 70%–80% |
| Rate vs. primary | Lowest | Slightly higher | Higher |
| 3-day right to cancel | Yes | Generally no | Generally no |
| Rental income can count | n/a | Usually no | Yes |
The federal three-day cancellation right applies to loans secured by your principal dwelling, which is one reason second home and rental HELOCs can fund faster. More in how long a HELOC takes.
Worked example: a $600,000 rental
Say the rental is worth $600,000 and the mortgage balance is $300,000. Here's the equity-based room at three common CLTV limits:
| Maximum CLTV | Total debt allowed | Room for a HELOC |
|---|---|---|
| 70% | $420,000 | $120,000 |
| 75% | $450,000 | $150,000 |
| 80% | $480,000 | $180,000 |
The actual limit also depends on credit, how the lender treats the rental income, your other debts, reserves and property eligibility. A five-point difference in the CLTV limit is worth $30,000 here, which is why the program matters as much as the property. Choose Investment in the HELOC calculator to run your numbers.
How to qualify
- Credit: most lenders want 680 or higher on a rental, and 720+ for the best limits.
- Debt-to-income: the HELOC payment counts against your income. Rental income from leases or your Schedule E can offset the property's expenses. If the ratio is tight, see HELOC with high debt-to-income.
- Reserves: some programs want several months of payments in savings after closing.
- Title: most programs need the property in your personal name or a revocable trust.
- Property type: single-family rentals and 2 to 4 unit buildings are most common. Some lenders accept short-term rentals and some don't.
What if the rental is in an LLC?
Most consumer HELOC programs won't lend to an LLC. A few business-purpose programs do, with different terms. Moving the deed into your personal name can work, but it has liability, insurance and tax consequences, so talk to your attorney and CPA first. For LLC-owned rentals, a DSCR cash-out refinance, which qualifies on the property's rent instead of your personal income, is often the cleaner path.
How investors use a HELOC
- Down payment on the next property. Many purchase loans allow borrowed funds secured by another property you own. Confirm with the purchase lender before you count on it.
- Rehab and renovation on a property you plan to hold.
- Paying off a hard money loan once the work is done.
- Reserves for vacancies, repairs and capital expenses.
Is the interest deductible?
Interest treatment depends on what the borrowed money is used for, the activity it supports and the applicable tax rules. Borrowing against a rental doesn't by itself make the interest a deductible rental expense. Keep records tracing the funds to their use and ask a tax professional how to classify the expense.
Frequently asked questions
Can you get a HELOC on an investment property?
Yes. Fewer lenders offer it than on a primary home, limits are lower, commonly about 70% to 80% combined loan-to-value, and rates are usually higher.
Can I use a HELOC on my primary home to buy a rental?
Yes, and it's one of the most common uses. A HELOC on your primary residence usually has a higher limit and a lower rate than one on a rental. Confirm with your purchase lender that funds borrowed against another property are acceptable for the down payment.
Can I get a HELOC on a rental owned by an LLC?
Most consumer HELOC programs won't lend to an LLC, though a few business-purpose programs do. A DSCR cash-out refinance is the common alternative for LLC-owned rentals.
Do short-term rentals qualify for a HELOC?
Some lenders accept short-term rentals and others exclude them. Expect more questions about income history and the property's location.
What credit score do I need for an investment property HELOC?
Plan on 680 or higher. Some programs accept lower scores on rentals, at reduced limits and higher rates.