Can You Get a HELOC on a Multifamily Property? A Guide for 2-4 Unit Owners

If you own a duplex, triplex, or fourplex, you might be wondering whether you can tap into the equity with a HELOC the same way single-family homeowners do.

The answer is yes — but the rules are different. Fewer lenders offer these products, the LTV limits are lower, rates are higher, and the qualification process is more involved. This guide covers exactly what to expect.

Yes, Multifamily HELOCs Exist — But They're Harder to Find

Most major banks and online HELOC lenders focus on single-family primary residences. When you start looking for a HELOC on a [2-4 unit property](/blog/buying-multi-family-first-property), especially one you don't live in, the lender pool shrinks dramatically.

Here's the landscape:

• Owner-occupied 2-4 units: More lenders available. Credit unions and community banks are your best bet. Some national lenders will do these too.
• Non-owner-occupied (investment) 2-4 units: Significantly fewer options. Expect to work with portfolio lenders, credit unions, or specialty HELOC providers.

The distinction between owner-occupied and investment matters more here than almost any other factor. Lenders consider owner-occupied multifamily properties less risky because you have personal skin in the game — you live there.

Eligibility Requirements

Property Type

The property must be a residential 2-4 unit building. Once you hit 5+ units, you're in commercial lending territory, and traditional HELOCs don't apply.

Eligible property types:

• Duplex (2 units)
• Triplex (3 units)
• Fourplex (4 units)

Mixed-use properties (like a storefront with apartments above) may qualify with some lenders, but most residential HELOC programs exclude them.

Occupancy Status

This is the biggest factor:

Owner-occupied: You live in one of the units as your primary residence. This opens up more lenders and better terms. You'll need to provide proof of occupancy — typically a [homestead exemption](/blog/homestead-exemption-guide), utility bills, or a signed affidavit.

Non-owner-occupied (investment): You don't live in the property. Fewer lenders, lower LTV limits, higher rates. Some lenders won't do HELOCs on investment multifamily at all.

Loan-to-Value (LTV) Limits

LTV requirements are stricter for multifamily properties:

These are combined LTV (CLTV) limits, meaning your first mortgage plus the HELOC can't exceed these percentages of the property's appraised value.

Example: You own a triplex appraised at $800,000. You owe $450,000 on the first mortgage. If the lender allows 70% CLTV:

$800,000 × 0.70 = $560,000 $560,000 − $450,000 = $110,000 maximum HELOC

Credit Score

Expect higher minimums than for a single-family HELOC:

• Owner-occupied multifamily: 680+ (700+ preferred)
• Investment multifamily: 720+ (some lenders require 740+)

[Debt-to-Income Ratio](/blog/dti-ratio-explained)

DTI requirements are standard — under 43-45% for most lenders. But here's where multifamily gets interesting: rental income from the other units can count toward your qualifying income.

How Rental Income Affects Your HELOC Qualification

This is one of the biggest advantages of owning multifamily. The rental income from non-owner-occupied units can help you qualify for a larger HELOC by boosting your income.

How Lenders Count Rental Income

Most lenders use 75% of gross rental income. The 25% haircut accounts for vacancies, maintenance, and management costs.

Example: You own a triplex and live in one unit. The other two units rent for $1,500/month each ($3,000 total). The lender counts 75% of that:

$3,000 × 0.75 = $2,250/month added to your qualifying income

If your W-2 income is $7,000/month, your qualifying income becomes $9,250/month. That significantly improves your DTI ratio.

Documentation Required

To count rental income, you'll typically need:

• Signed lease agreements for all tenants
• Two years of tax returns (Schedule E showing rental income and expenses)
• Rent roll showing current tenants, lease terms, and payment history
• Bank statements showing rental deposits (some lenders require 12-24 months)

If you recently purchased the property and don't have two years of tax history, some lenders will accept lease agreements and an appraisal with a market rent analysis.

What If the Property Has Vacancies?

Vacant units are a problem. Lenders either exclude vacant unit income entirely or use market rent from the appraisal at a deeper discount (50-60% instead of 75%).

If you're applying for a HELOC, try to have all units leased. It makes a material difference in qualification.

Interest Rates on Multifamily HELOCs

Expect to pay a premium over single-family HELOC rates:

• Owner-occupied [multifamily HELOC](/blog/heloc-for-house-hacking): Typically prime + 1% to prime + 3%. In the current environment, that's roughly 8.5-11%.
• Investment multifamily HELOC: Prime + 2% to prime + 4%. Roughly 9.5-12%.

The spread over single-family rates is usually 0.5-1.5% for owner-occupied and 1-3% for investment.

Some lenders offer promotional rates (lower for the first 6-12 months), but be aware of what the rate reverts to.

Where to Find Multifamily HELOC Lenders

Credit Unions

Credit unions are often the best source for multifamily HELOCs, especially for owner-occupied properties. They tend to have more flexible underwriting guidelines and portfolio their loans (meaning they don't sell them, so they can make exceptions to standard guidelines).

Look for credit unions that serve your area and have a real estate lending department. Larger credit unions with $1B+ in assets are more likely to offer these products.

Community Banks

Local and regional banks that hold loans in portfolio are another good option. They know the local rental market and may be more comfortable lending on multifamily properties in areas they understand.

Specialty HELOC Lenders

A growing number of fintech and specialty lenders now offer HELOCs on investment properties, including multifamily. These tend to have streamlined application processes but higher rates.

What About Big Banks?

Most major national banks (Chase, Bank of America, Wells Fargo) are hit or miss on multifamily HELOCs. Some will do owner-occupied duplexes but nothing beyond that. Others have pulled back from the product entirely. Always check current availability — policies change frequently.

The Appraisal Process for Multifamily Properties

The appraisal is more complex and more expensive for multifamily:

• Single-family appraisal cost: $400-$600
• Multifamily (2-4 unit) appraisal cost: $600-$1,200

The appraiser evaluates multifamily properties using both the sales comparison approach (what similar properties sold for) and the income approach (what the property's rental income supports as a value).

The income approach matters because multifamily value is driven partly by the income the property generates. Higher rents = higher value = more equity = larger potential HELOC.

What Can Go Wrong With the Appraisal

• Below-market rents drag down the value. If you've been charging below-market rent (common with long-term tenants), the income approach may produce a lower value. Consider raising rents to market before applying.
• Deferred maintenance. Multifamily properties often have more wear and tear. Significant deferred maintenance can reduce the appraised value and signal risk to the lender.
• Comparable sales are scarce. In some markets, 3-4 unit sales are infrequent, making it harder for the appraiser to find good comps.

Using a Multifamily HELOC Strategically

Fund Improvements to Increase Rents

Use HELOC funds to renovate units and justify rent increases. If a $30,000 renovation per unit allows you to raise rent by $400/month, that's $4,800/year per unit — a 16% return on the renovation cost.

Acquire Additional Properties

Draw from your multifamily HELOC to fund down payments on additional investment properties. This is how many small-scale real estate investors grow their portfolios.

Consolidate Higher-Interest Debt

If you have contractor debt, credit card balances, or personal loans at 15-25%, consolidating into a HELOC at 9-11% saves money — even at multifamily HELOC rates.

Cover Capital Expenditures

Roof, HVAC, plumbing — major systems in multifamily properties are expensive. A HELOC provides a readily available source of funds without disrupting your cash reserves.

Common Pitfalls

Overleveraging

Multifamily properties are income-producing assets, but they're not immune to market downturns. If you max out a HELOC and rents drop or vacancies spike, you can find yourself underwater fast.

Keep your combined LTV under 70% if possible. The lower your leverage, the more resilient you are.

Ignoring Variable Rate Risk

HELOC rates are variable. On a $150,000 balance, every 1% rate increase costs $1,500/year. Over a $150,000 balance and 3% rate increase, that's $4,500/year — potentially wiping out your cash flow on one or more units.

Not Accounting for the Repayment Period

Most HELOCs have a 10-year draw period followed by a 10-20 year repayment period. When you shift from interest-only to principal + interest payments, your monthly payment can double or more.

Plan for this. Either pay down the balance during the draw period or have a refinance strategy ready.

[Using HELOC Funds](/blog/heloc-draw-period-explained) for Operating Expenses

This is a red flag for your finances. If you're tapping a HELOC to cover regular operating expenses (property management, insurance, routine maintenance), the property isn't cash-flowing properly. Address the root cause.

Step-by-Step: Getting a HELOC on Your Multifamily Property

1. Determine your equity position. Get a rough estimate of your property's value (check recent comparable sales or use an online estimator) and subtract your mortgage balance.

2. Check occupancy classification. If you live in one unit, make sure your lender records show it as owner-occupied. This opens up better terms.

3. Gather rental documentation. Collect current leases, two years of tax returns with Schedule E, and recent bank statements showing rent deposits.

4. Shop multiple lenders. Start with credit unions and community banks. Get quotes from at least 3-4 lenders, as rates and terms vary significantly for multifamily.

5. Consider raising rents to market. If you're below market, adjusting rents before applying can increase the appraised value via the income approach.

6. Address deferred maintenance. Fix visible issues before the appraisal. Fresh paint, repaired stairs, working appliances — these details matter.

7. Apply and be patient. Multifamily [HELOC underwriting](/blog/heloc-application-mistakes) takes longer than single-family. Expect 30-60 days from application to funding.

Frequently Asked Questions

Can I get a HELOC on a duplex I don't live in?

Yes, but options are limited. You'll need to find a lender that offers HELOCs on investment properties. Expect a maximum CLTV of 65-70%, rates 1-2% higher than owner-occupied, and a minimum credit score of 720+.

Do all four units need to be rented for me to qualify?

No, but having all units leased strengthens your application. Vacant units reduce the rental income the lender can count, which may lower how much you qualify for.

Can I get a HELOC on a multifamily property I just purchased?

Most lenders require a seasoning period — typically 6-12 months of ownership — before you can apply for a HELOC. Some portfolio lenders may waive this for strong borrowers.

Is the interest on a multifamily HELOC tax-deductible?

It depends on how the funds are used. If you use the HELOC to improve the rental property, the interest is generally deductible as a rental expense. If you use it for personal purposes, it's not. The allocation matters — consult your CPA.

What's the minimum equity I need?

You generally need at least 25-40% equity in a multifamily property to qualify for a HELOC, depending on the number of units and occupancy status.

Can I get a HELOC on a mixed-use property?

Some lenders will consider mixed-use properties (commercial + residential) if the residential portion makes up 51%+ of the total square footage. But most standard HELOC programs exclude mixed-use. You may need a commercial line of credit instead.

Bottom Line

Getting a HELOC on a 2-4 unit property is absolutely possible, but requires more legwork than a single-family home. The keys are finding the right lender (credit unions and community banks), having strong equity and credit, and documenting your rental income thoroughly.

For owner-occupied multifamily owners, a HELOC is one of the most powerful tools available — it lets you tap the equity built by your tenants' rent payments and redeploy it for improvements, acquisitions, or other investments.

For investment property multifamily owners, the options are more limited and more expensive, but they exist. Start your search early, shop multiple lenders, and be prepared for a more involved process than you'd face with a standard single-family HELOC.

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