Compare Home Equity Offers for Investment Properties

Can you get a HELOC on an investment property?

Yes, though fewer lenders offer it than on the home you live in. Some banks, credit unions and other lenders offer a home equity line of credit on a rental or investment property, and some offer a closed-end home equity loan instead. Whether a lender will lend on yours depends on the property, how much of it you own, and that lender's own rules for homes you don't live in.

How is it different from the loan on your own home?

The equity is calculated the same way: the property's value less what you still owe on it. What changes is how lenders read the risk. Lenders see more risk in a rental, because people tend to keep up the payment on the home they live in first, and a property that is vacant or mid-renovation is harder to lend against than one that is rented and occupied.

How much can you borrow?

Lenders work from a maximum combined loan-to-value for investment properties, which is usually lower than the one they allow on a primary residence. Your limit is that percentage of the property's appraised value, less the balance you still owe.

What lenders look at

1. Equity in the property: the gap between its value and what you owe is the room you have to borrow.

2. Rental income: a lease and a record of the rent received tell a lender the property can carry part of the payment.

3. Your own credit and debts: the loan is still yours, so your credit history and existing obligations are part of the decision.

4. The property itself: condition, occupancy and how many units it holds all change which lenders will look at it.

Is a HELOC or a home equity loan the better fit?

A line of credit draws as you need it and charges interest on what you use, which suits staged work such as a renovation between tenants. A closed-end loan pays out once at a fixed amount and is repaid on a set schedule, which suits a single known cost.

What to have ready before you compare

• The property address, its current estimated value and the balance on any loan against it.

• Whether it is rented, vacant, or a second home, and the lease if there is one.

• How the property is titled, and whether it is held personally or in a company.

• What you intend to use the money for, since that is one of the first questions a lender asks.

Questions worth asking each lender

Ask whether the lender lends on investment properties at all, what maximum combined loan-to-value it allows on a rental, whether it counts rental income and how, and whether it lends on a property held in a company rather than in your own name. Those four answers separate the offers more than the headline rate does.

Compare home equity offers for a rental property

Tell us about the property and what you want to do with the equity, and we'll match you with lenders in our network that may lend on investment properties. Nothing here is an offer to lend, and every lender sets its own terms.