Can You Get a HELOC on a Vacation Home? Requirements & Options

Yes, you can get a HELOC on your vacation home. But expect stricter requirements than you'd face on your primary residence.

Lenders see second homes as riskier. If money gets tight, which mortgage are you more likely to default on—the roof over your head or the beach house you visit twice a year?

Here's what you need to know before applying.

Vacation Home vs Investment Property: The Distinction Matters

First, make sure your property qualifies as a vacation home—not an investment property. The requirements are different.

Vacation home (second home):

• You use it personally for at least 14 days/year OR 10% of days rented (whichever is greater)
• It's in a location you'd reasonably vacation (not next door to your primary home)
• It's suitable for year-round occupancy

Investment property:

• Primarily rented out for income
• Minimal personal use
• Stricter requirements and higher rates than vacation homes

If you rent your vacation home on Airbnb most of the year, lenders may classify it as investment property. That means even tougher qualification hurdles.

How Vacation Home HELOCs Differ from Primary Residence

The differences aren't huge, but they compound. Lower LTV means less borrowing power. Higher rates mean higher payments. Stricter credit requirements mean some borrowers won't qualify.

The Two-Property DTI Math

Here's what catches people off guard: When you apply for a HELOC on your vacation home, lenders calculate your debt-to-income ratio using both properties.

Example:

• Monthly gross income: $12,000
• Primary mortgage payment: $2,500
• Vacation home mortgage payment: $1,800
• Other debts: $500
• Proposed HELOC payment: $400

Total monthly debt: $5,200 DTI: 43.3%

Most lenders cap DTI at 43-45%. In this example, you're right at the threshold. Any additional debt could disqualify you.

The key insight: You might have $150,000 in equity but only qualify for $60,000 based on your DTI. Your borrowing power is limited by whichever ceiling is lower—equity or income.

Vacation Home HELOC Requirements

Credit Score: 680-700+

Primary residence HELOCs often approve scores as low as 620-640. For vacation homes, most lenders want 680 minimum. Better rates start at 720+.

Equity: 20-30% Minimum

Lenders typically cap vacation home HELOCs at 70-80% LTV. If you owe 80% already, you're unlikely to qualify.

Example:

• Vacation home value: $400,000
• Mortgage balance: $280,000 (70% LTV)
• Available equity for HELOC: $0-$40,000 (assuming 80% max CLTV)

DTI: 43% or Lower

Including both mortgages and the proposed HELOC payment. Some lenders stretch to 50% for strong borrowers.

Income Documentation

Standard requirements apply:

• W-2s and tax returns (2 years)
• Recent pay stubs
• If self-employed: 2 years of tax returns, possibly P&L statements

Property Requirements

• Must be habitable year-round
• Must be in a recognized vacation/resort area (or logically far from primary home)
• Adequate insurance coverage

Which Lenders Offer Vacation Home HELOCs?

Fewer lenders offer HELOCs on second homes compared to primary residences. Your options:

National banks: Bank of America, Chase, Wells Fargo typically offer second home HELOCs but with stricter requirements.

Credit unions: Often more flexible than big banks. If you're a member of a credit union, check their second home policies.

Regional banks: Banks in vacation destination areas (Florida, mountain towns, beach communities) often specialize in second home lending.

Online lenders: Some fintech lenders offer second home HELOCs. Compare rates carefully.

HonestCasa: We work with second homes. Check your eligibility to see what you qualify for.

Common Uses for Vacation Home HELOCs

Renovations and Upgrades

The most common reason. Upgrade the kitchen, add a deck, or make repairs. If improvements increase rental income or property value, the HELOC may pay for itself.

Rental Income Optimization

Finishing a basement or adding a bedroom can significantly boost short-term rental income. Calculate whether the increased income justifies the borrowing cost.

Purchase Another Property

Use vacation home equity as a down payment on a third property. Be careful with DTI—adding a third property payment makes qualification harder.

Debt Consolidation

If you have high-interest debt, a vacation home HELOC might offer lower rates. Just remember: you're converting unsecured debt to debt secured by your vacation home.

Tax Implications

Interest on vacation home HELOCs may or may not be deductible. The rules:

Deductible: If you use the funds to buy, build, or substantially improve the vacation home that secures the loan.

Not deductible: If you use the funds for other purposes (debt consolidation, investments, another property).

The vacation home's mortgage interest is generally deductible (up to the combined $750,000 limit across all properties), but HELOC interest follows the "use of funds" rule.

Consult a tax professional for your specific situation.

Frequently Asked Questions

Can I get a HELOC on a home I rent out part-time?

Yes, as long as it qualifies as a vacation home (personal use of 14+ days or 10% of rental days). If rental is the primary purpose, it's an investment property with different rules.

Is the rate higher than my primary residence HELOC?

Yes, typically 0.25-0.5% higher. The premium reflects the added risk lenders perceive with second homes.

How much can I borrow?

Depends on your equity and DTI. Most lenders cap at 70-80% CLTV on vacation homes. Your DTI might limit you further.

What if I convert my vacation home to a rental?

Notify your HELOC lender. The property reclassification might trigger a review or change in terms. Some lenders may call the loan due.

Can I get a HELOC on a vacation home I own free and clear?

Yes, and you'll likely get better terms. No existing mortgage means lower risk for the lender.

The Bottom Line

Getting a HELOC on your vacation home is definitely possible—but plan for stricter requirements:

• Credit score: Aim for 700+
• Equity: Need at least 20-30%
• DTI: Include both mortgage payments in your calculations
• Shop around: Fewer lenders serve this market, so compare options

The two-property DTI calculation trips up many applicants. Run the numbers before you apply to avoid surprises.

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Own a vacation home and curious about your equity options? Check your eligibility with HonestCasa—we'll give you a straight answer on what's possible.