Investors are constantly looking for new and creative ways to finance new real estate investments and expand their portfolios. This can lead them to various different lenders and financing options, but one of the stand-out methods has to be using a HELOC for investment property purchases. 

Many traditional financing options in real estate require you to have a significant amount of cash set aside in order to make the deal happen. However, what if we told you that by using a home equity line of credit or HELOC for investment property purchases, you can secure a down payment or even buy your next investment without spending any of your own money? 

If you would like to to show you how a HELOC can allow you to leverage your existing investments and continue to invest in real estate with zero money down, you are in the right place. 

However, before we get started, if you would like to book a call with a member of our team, simply click the link below.

What is a HELOC? 

Before we start utilizing a HELOC for investment property purchases, it is important that you understand exactly what a home equity line of credit is. 

Essentially, a home equity line of credit is a loan available to homeowners and investors that allows the property owner to take out a loan up to the value of the equity they have in a particular property. This loan is secured against that property, meaning that if the borrower fails to repay the loan, they may lose the property.

I find that in many ways, a HELOC is similar to a second mortgage, but differs in a few key aspects. 

Draw Period 

Instead of receiving all of the funds for the loan at once, there is a dedicated ‘draw period’ where the borrower can draw out as much money they need up to their equity in the property. On average, this period is between five and ten years, as opposed to a mortgage which pays out in full at the time of closing. During this period, the borrower is typically only required to pay interest on their loan amount. During the draw period, the borrower may also be permitted to make payments towards their loan principal if they choose to do so. 

Repayment Period 

After the draw period ends, the repayment period begins, and the borrower will be required to start repaying their principal loan as well as their interest payments. This period is traditionally between ten and twenty years long.

However, during this period you can choose to pay extra towards the principal amount, which can help you save money in the long run.

Can You Use a HELOC for Investment Property Purchases? 

One of the key benefits of a HELOC is that due to its nature as a line of credit, you are capable of using it for whatever you wish. This can include renovations on your existing properties, lifestyle expenses such as vacations, or you can use your HELOC for investment property down payments.

Using a HELOC to purchase an investment property can often be an incredibly advantageous option because once the property begins to cash flow, you can use those funds to pay down the loan during the draw period and lower your required monthly payments before you are entering the dedicated repayment period. – saving you money in the long run. 

Discover How To Apply For An Investment Property Mortgages With This Step By Step Guide

Apply For a HELOC With LendCity

Do you have significant equity built up in your investment properties? If so, then you may qualify for a HELOC from one of our lenders.

So, let us help you secure your line of credit today, and while we’re at it, we can show you how to use your HELOC for investment property purchases, renovations and more.

All you need to do to get started is book a call with us at the link here.

What Do You Need in Order to Qualify for a HELOC? 

There are three key factors that will impact your ability to qualify for a HELOC. These factors are: 

Credit Score 

As with virtually all loans and lines of credit, your lender is going to want to see that you have a good credit score. The minimum required score that you will need to qualify will differ between lenders, but on average lenders are looking for a score of approximately 740. 

Debt-to-Income Ratio 

Another important factor that lenders will look at when qualifying you for a HELOC is your debt-to-income ratio. This ratio will indicate to the lender how much money you have coming in each month and how much of those funds is being spent on recurring expenses and pre-existing debt. The lower this score is, the higher your chances will be to qualify as you will be deemed more capable of making your loan payments on-time. Lenders are usually looking for a maximum ratio of 40-50 per cent of your income going towards debts and other expenses. 


The single-most important factor in qualifying for a HELOC is how much equity you have in the home. This is the difference between the value of your property and your outstanding mortgage debt. If you have equity built in the home, you have passed this piece of criteria. However, your total equity will impact the maximum draw amount you will be permitted to take. 

Advantages of Using a HELOC for Investment Property Purchases

Here are some of the key advantages of using a HELOC to buy an investment property

Boost Your Credit 

As it is a line of credit, paying off your HELOC in a consistent, timely manner will boost your credit score. You may also see growth if you do not use too much of your credit at one time, opting for the more conservative thirty per cent approach. 

Leveraging Existing Investments 

Since a HELOC leverages properties you already own, they are often viewed as more secure investments and frequently have lower interest rates than other hard-money loans. 

Interest-Only Payments During the Draw Period 

During your draw period, you are only required to pay interest on the credit you decide to use, this can make a HELOC a very powerful tool if you use the period to its fullest potential. The lower monthly payments also provide more room for you to get new investments set up and new streams of cash flow started before you feel the full force of the loan – potentially making it easier to repay later. 

Should You Get a Cash-Out Refinance or a HELOC?

If you are not sure whether you should get a cash-out refinance or HELOC for investment property purchases, give my team a call. We can take a look at your specific financial situation in order to ensure that you are getting the best product for you and your goals.

Let Us Help You Find the Correct Lender 

It is important to know that not all lenders are going to allow you to open a HELOC for investment property purchases, and not all of the ones that will are investor friendly. That is why at LendCity, we work with a wide network of lenders in order to match you with the lender that is best suited to your situation and strategy. 

To get started with us today, visit us at, give us a call at 519-960-0370, or book a call at the link below.

Finance Corner, Using A HELOC To Finance Your First Investment Property

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