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Customer Example

Using Home Equity to Buy a Rental Property

Based on an actual customer experience. The customer’s name and identifying details have been omitted to protect their privacy. Any projected outcomes are identified as estimates.

A homeowner wanted to explore buying a rental property, but did not want to put all of their available savings into the down payment and purchase costs.

Audi Garner, Mortgage Broker NMLS #190235
By Audi Garner · NMLS #190235 · West Capital Lending · NMLS #1566096 · Published October 5, 2026 · ~3 min read

The short version

The homeowner considered a HELOC on their current home as a way to fund a rental property purchase while keeping their existing first mortgage and their cash reserves. Before deciding, they looked past the down payment to every ongoing cost, and asked whether their household income could carry both loans if the property sat vacant. This page describes their goal and their plan. It does not report rental income, returns or other completed results.

The goal

Their goal was to purchase an income-producing asset while maintaining cash reserves and a manageable repayment plan.

They considered a HELOC as a way to access equity in their current home while retaining their existing first mortgage.

What they weighed

The decision required looking beyond the down payment. They evaluated:

  • The mortgage on the rental property
  • Repayment of the HELOC
  • Property taxes and insurance
  • Property management
  • Vacancies
  • Maintenance
  • Reserves for major repairs

They also considered whether their household income could cover both loans if the property was temporarily vacant.

For how lenders look at this kind of purchase, see using a HELOC to buy investment property and investment property HELOC requirements.

What this example does and does not show

This is a description of one homeowner’s goal and how they approached the decision. It is not a report of rental income, appreciation, savings or investment returns, and none are stated or implied here.

What to consider

Borrowing against home equity adds debt. Rental income and appreciation are not guaranteed, and expenses or HELOC payments can increase. Failure to repay the HELOC can put the home securing it at risk.

FAQ

Can you use a HELOC on your home for a rental property down payment?

In many cases, yes. A HELOC on your current home can be a source of funds for a down payment and purchase costs. The lender on the rental purchase will want to know where the funds came from and will count the HELOC payment in your debt-to-income ratio.

Will rental income cover both loan payments?

It is not guaranteed. Rents change, properties sit vacant, and repairs come up. A common test is whether household income could carry the rental mortgage and the HELOC for a period with no rent coming in.

What happens to the HELOC if the rental does not work out?

The HELOC still has to be repaid. It is secured by the home it was taken against, not by the rental property, so missed payments put that home at risk.

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Keep reading

Using a HELOC to Buy Investment Property

How it works and what lenders look at.

HELOC for Investment Property

Borrowing against a rental you already own.

Investment Property HELOC Requirements

Credit, equity and reserve rules.

HELOC vs. Cash-Out Refinance for Investors

Which fits which situation.

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All HELOC Examples

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Audi Garner, Mortgage Broker NMLS #190235
Audi Garner — Branch Manager & Mortgage Broker

NMLS #190235 · West Capital Lending (NMLS #1566096). 20+ years in mortgage lending, specializing in HELOCs and home equity as a direct lender across 22 states. Every HELOCpedia article is written or reviewed by Audi personally. More about Audi → · Verify NMLS