HELOC for Investment Property: Complete Guide to Qualifying

Yes, you can get a HELOC on an investment property. It's harder than getting one on your primary residence—fewer lenders offer them, requirements are stricter, and rates run higher. But if you have solid equity in a rental property, it's a powerful tool for funding renovations, buying your next property, or managing cash flow.

Here's exactly what you need to qualify and how to maximize your approval odds.

Why Investment Property HELOCs Are Harder to Get

Lenders see investment properties as riskier than primary residences. Here's their logic:

If money gets tight, which mortgage do you pay first? Most people prioritize keeping a roof over their own head. Your rental property payment comes second. That makes lenders nervous.

Rental income isn't guaranteed. Vacancies happen. Tenants stop paying. The cash flow that looks solid on paper can disappear fast.

The result? Many lenders simply don't offer HELOCs on investment properties. Those that do impose stricter requirements and charge higher rates.

Investment Property HELOC Requirements

Here's how the requirements compare to a primary residence HELOC:

Let's break down each requirement:

Equity: You Need More of It

For a primary residence HELOC, 15-20% equity often works. For an investment property, most lenders want 25-30% equity—meaning you can only borrow against a smaller portion of your property's value.

Example: Your rental property is worth $400,000 with a $250,000 mortgage balance. That's $150,000 in equity (37.5%). With a 70% max LTV, you could borrow up to $280,000 total—minus your existing $250,000 mortgage, leaving $30,000 available through a HELOC.

Credit Score: Higher Is Better

While some lenders technically accept 620, most want 700+ for investment property HELOCs. A score of 740+ gets you the best rates and smoothest approval.

Why it matters: Every point below 700 either raises your rate or reduces your available lenders. If you're at 680, spending a few months improving your score before applying could save thousands.

Debt-to-Income: Watch the Calculation

Your DTI includes all monthly debt payments divided by gross monthly income. Most lenders cap this at 43% for investment property HELOCs.

Important: Many lenders only count 75% of your rental income toward your gross income (they discount it for vacancies and expenses). So even if your rental brings in $2,000/month, they might only count $1,500.

LTV: Lower Limits

Primary residence HELOCs often allow 80-85% combined loan-to-value. Investment property HELOCs typically cap at 70-75%.

Translation: You keep more equity locked up, and you can borrow less against your property's value.

What Rates to Expect

Investment property HELOC rates run 1-2% higher than primary residence HELOCs. If the current average for primary residence is around 7.44%, expect 8.5-9.5% or higher for investment property.

Rates vary significantly by lender, so shopping matters more here than anywhere else.

Best Uses for Investment Property HELOCs

1. Renovations That Boost Rental Value

Updating kitchens, bathrooms, or adding amenities can increase rent and property value. Using a HELOC lets you fund these upgrades without draining savings.

Example: A $30,000 kitchen renovation that increases monthly rent by $200 pays for itself in about 12 years—faster if the property value increases too.

2. Down Payment for Your Next Property

Using equity from Property A to buy Property B is a classic real estate investment strategy. A HELOC gives you flexible access to that equity without selling.

Caution: You're increasing your leverage and risk. Make sure the numbers work even if the new property sits vacant for a few months.

3. Cash Flow Management

Rental properties come with irregular expenses—emergency repairs, vacancy gaps, seasonal fluctuations. A HELOC acts as a flexible credit line for these unpredictable costs.

Smart move: Open the HELOC when you don't need it. Approval is easier when your finances look strong, and you'll have access when emergencies hit.

How to Improve Your Approval Odds

1. Build More Equity First

If you're borderline on equity requirements, consider:

• Paying down your existing mortgage
• Waiting for property appreciation
• Making improvements that increase appraised value

2. Boost Your Credit Score

Before applying:

• Pay down credit card balances (under 30% utilization)
• Don't open new credit accounts
• Dispute any errors on your credit report

3. Document Your Rental Income

Lenders want proof your rental income is real and stable:

• Two years of tax returns showing rental income
• Current lease agreements
• Bank statements showing rent deposits
• Profit and loss statements

4. Reduce Your DTI

Pay off other debts before applying. Every debt you eliminate improves your DTI ratio and your approval odds.

5. Shop Multiple Lenders

Investment property HELOCs are a niche product. Some lenders don't offer them at all. Others specialize in them. Shopping around isn't optional—it's essential.

Alternatives If You Can't Qualify

Cash-out refinance: Replaces your existing mortgage with a larger one. May be easier to qualify for and offers fixed rates, but you lose your current mortgage rate.

HELOC on your primary residence: If you have equity in your home, this route is easier with better rates. Use those funds for investment property needs.

Portfolio loan: Some local banks and credit unions offer portfolio loans with more flexible terms for investors. They keep the loan in-house rather than selling it, giving them more underwriting discretion.

How HonestCasa Helps Investment Property Owners

Traditional HELOCs take 4-6 weeks to close. HonestCasa closes in as few as 7 days.

For investors, speed matters. Whether you're funding a renovation, seizing a property opportunity, or handling an emergency, waiting six weeks isn't always an option.

Get your investment property HELOC estimate in minutes → Check your rate

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Key Takeaways

• Yes, you can get a HELOC on investment property—but requirements are stricter
• Expect 25-30% equity requirement and max LTV of 70-75%
• Credit score of 700+ gives you the best options
• Rates run 1-2% higher than primary residence HELOCs
• Shop multiple lenders—this is a niche product with significant rate variation
• Document your rental income thoroughly—lenders will scrutinize it

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Need a faster path to your investment property HELOC? HonestCasa closes in as few as 7 days while most lenders take 4-6 weeks. Get your estimate now.