As a real estate investor I’ve learned that accessing equity from investment properties can be a game-changer for expanding your portfolio. A Home Equity Line of Credit (HELOC) offers a flexible financing solution but finding the right lender isn’t always straightforward.
I’ll guide you through my top picks for HELOC lenders that specialize in investment properties. These lenders stand out for their competitive rates favorable terms and understanding of real estate investors’ unique needs. Whether you’re looking to fund renovations purchase new properties or consolidate debt a HELOC can provide the financial leverage you need to grow your real estate empire.
- Best Heloc Lenders for Investment Property have stricter requirements than primary residence HELOCs, including higher interest rates (1-2% more) and lower LTV ratios (65-75%)
- Top HELOC lenders for investment properties include PenFed Credit Union (80% LTV), Figure (digital platform), Regions Bank, and TD Bank, with rates typically starting between 7.75-8.99% APR
- Most lenders require a minimum credit score of 720+, at least 25% equity in the property, and extensive documentation including rental income history and property management records
- The application process typically takes 19-29 days total, spanning initial review, documentation, property appraisal, underwriting, and closing phases
- Key factors for approval include maintaining a DTI ratio below 43%, having 6 months of cash reserves, and documenting 24 months of stable rental income history
Best HELOC Lenders for Investment Property
Best Heloc Lenders for Investment Property on an investment property enables real estate investors to access equity while maintaining ownership of their rental properties. This financing option operates differently from traditional residential HELOCs with distinct requirements and considerations.
Key Differences from Primary Residence HELOCs
Investment property HELOCs feature unique characteristics that set them apart from primary residence options:
- Higher interest rates (typically 1-2% more) due to increased lender risk
- Lower loan-to-value ratios (65-75% compared to 85-90% for primary residences)
- Stricter credit requirements (minimum credit scores of 720+ vs 680+ for primary homes)
- Additional documentation including rent rolls tax returns tenant leases
- Larger down payment requirements (25-35% vs 15-20% for primary residences)
Benefits and Risks of Investment Property HELOCs
- Tax-deductible interest when used for property improvements or repairs
- Flexible draw periods allowing access to funds as needed
- Interest-only payment options during the draw period
- No restrictions on fund usage within investment strategies
- Quick access to capital for emergency property repairs
- Variable interest rates that can increase monthly payments
- Property foreclosure potential if payments aren’t met
- Reduced cash flow from higher payment obligations
- Market value fluctuations affecting available credit
- Tenant vacancy impacts on repayment capacity
| Aspect | Investment Property | Primary Residence |
|---|---|---|
| Interest Rate | 6.5-9.5% | 5.5-7.5% |
| Max LTV | 65-75% | 85-90% |
| Min Credit Score | 720+ | 680+ |
| Down Payment | 25-35% | 15-20% |
Top HELOC Lenders for Investment Properties
After analyzing multiple lenders’ offerings for investment property HELOCs, I’ve identified four institutions that provide exceptional terms, competitive rates, and investor-friendly policies. Each lender offers unique advantages for real estate investors seeking flexible financing options.
PenFed Credit Union
PenFed Credit Union stands out with its 80% combined loan-to-value ratio for investment properties. The credit union charges no application fees, closing costs, or annual fees on HELOCs starting at $25,000. Their variable rates begin at 7.75% APR for qualified borrowers with credit scores above 740. Membership is available nationwide, though property locations are restricted to specific states.
Figure
Figure’s digital-first platform streamlines the HELOC application process with decisions in 5 minutes. They offer fixed-rate HELOCs up to $400,000 with loan-to-value ratios reaching 75% for investment properties. Starting rates range from 8.99% to 13.25% APR based on creditworthiness. Figure eliminates traditional closing costs through their online-only model.
Regions Bank
Regions Bank provides HELOCs for investment properties across 15 states with loan amounts from $10,000 to $500,000. Their floating rates start at 8.25% APR for prime borrowers with 70% maximum LTV ratios. Notable features include a 10-year draw period, 20-year repayment terms, and relationship discounts for existing customers with checking accounts.
TD Bank
TD Bank offers investment property HELOCs in 15 East Coast states with credit lines up to $500,000. Their variable rates begin at 8.49% APR for borrowers with excellent credit scores. The bank allows up to 75% CLTV ratios and provides a 10-year draw period followed by a 15-year repayment period. TD Bank waives closing costs for lines over $50,000.
| Lender | Min Credit Score | Max LTV | Starting APR |
|---|---|---|---|
| PenFed | 740 | 80% | 7.75% |
| Figure | 720 | 75% | 8.99% |
| Regions | 700 | 70% | 8.25% |
| TD Bank | 720 | 75% | 8.49% |
Key Factors to Consider When Choosing a Lender
Selecting the right Best Heloc Lenders for Investment Property requires careful evaluation of multiple criteria. Here are the essential factors to examine when comparing lenders:
Interest Rates and Terms
Best Heloc Lenders for Investment Property rates for investment properties typically range from 1-2% higher than primary residence rates. Most lenders offer variable APRs starting at 8.25% with 10-year draw periods followed by 20-year repayment terms. I find these common rate features among top lenders:
- Interest rate caps limiting maximum rate increases
- Relationship discounts reducing rates by 0.25-0.50%
- Fixed-rate conversion options during the repayment period
- Rate lock opportunities for drawn amounts
Property Value Requirements
Investment property HELOC lenders maintain strict standards for property valuation:
- Maximum combined loan-to-value (CLTV) ratios of 70-80%
- Professional appraisals required for properties valued over $250,000
- Minimum property value thresholds ranging from $100,000-$250,000
- Exclusions for certain property types like manufactured homes
- Regular property inspection requirements during the loan term
Credit Score Minimums
Lenders enforce higher credit requirements for investment property HELOCs:
| Credit Tier | Typical Score Range | Rate Impact |
|---|---|---|
| Excellent | 740+ | Best rates |
| Good | 700-739 | +0.25% to 0.50% |
| Fair | 660-699 | +0.75% to 1.25% |
- Debt-to-income ratios below 43%
- Clean credit history with no late payments
- Minimum 2 years of property management experience
- Proven rental income documentation
- Multiple credit bureau verification
Application Process and Requirements
Securing a Best Heloc Lenders for Investment Property requires specific documentation and follows a structured timeline. The application process combines standard mortgage requirements with additional criteria specific to investment properties.
Documentation Needed
Investment property HELOC applications require these essential documents:
- Proof of Income
- Two years of tax returns
- Three months of bank statements
- W-2 forms or 1099s
- Pay stubs from the past 30 days
- Rental income documentation
- Property Documentation
- Current property insurance
- Existing mortgage statements
- Property tax records
- Rental agreements or lease contracts
- Property management agreements
- Financial Records
- Schedule E forms showing rental income
- Asset statements for investments accounts
- Documentation of other rental properties
- Recent credit report (within 60 days)
- List of current debts obligations
- Initial Application (1-2 days)
- Online submission
- Basic information verification
- Credit check authorization
- Document Review (3-5 days)
- Verification of submitted materials
- Request for additional documentation
- Income assessment
- Property Appraisal (5-7 days)
- Professional evaluation scheduling
- On-site inspection
- Market analysis completion
- Final Underwriting (7-10 days)
- Detailed financial review
- Risk assessment
- Terms determination
- Closing Process (3-5 days)
- Document preparation
- Final fee calculations
- Signing appointment scheduling
| Phase | Duration | Key Activities |
|---|---|---|
| Initial Review | 1-2 days | Application submission credit check |
| Documentation | 3-5 days | Document verification income review |
| Appraisal | 5-7 days | Property evaluation market analysis |
| Underwriting | 7-10 days | Financial assessment approval decision |
| Closing | 3-5 days | Final paperwork HELOC activation |
Tips for Getting Approved
Securing a Best Heloc Lenders for Investment Property requires specific preparation to meet lenders’ strict qualification criteria. Here are proven strategies to enhance approval chances.
Improving Your Approval Odds
- Maintain a credit score above 720 through consistent payment history on existing loans
- Keep debt-to-income ratio below 43% by reducing outstanding debts
- Document rental income stability with 24 months of payment records
- Build cash reserves equal to 6 months of HELOC payments
- Increase property equity through value-adding improvements
- Gather detailed property management records including maintenance costs insurance payments
- Present a clear business plan outlining investment strategy rental projections
- Credit score below lender minimum requirements (typically 680)
- Insufficient rental income documentation or irregular payment history
- Property value decline since purchase or recent market downturn
- High combined loan-to-value ratio exceeding 80%
- Negative cash flow from existing rental properties
- Recent bankruptcy foreclosure or short sale (within 7 years)
- Incomplete application missing required documents such as:
- Tax returns
- Bank statements
- Property insurance proof
- Current lease agreements
| Approval Factor | Typical Minimum Requirement |
|---|---|
| Credit Score | 680-720 |
| DTI Ratio | 43% or less |
| Cash Reserves | 6 months of payments |
| Rental History | 24 months documentation |
| LTV Ratio | 80% maximum |
| Property Value | $100,000 minimum |
Choosing the right Best Heloc Lenders for Investment Property requires careful consideration of multiple factors. I’ve shared detailed insights about top lenders and their unique offerings to help you make an informed decision for your real estate investment journey.
Remember that while Best Heloc Lenders for Investment Property can be powerful tools for expanding your investment portfolio they come with stricter requirements than primary residence HELOCs. I recommend focusing on improving your credit score maintaining solid rental income records and building cash reserves before applying.
By partnering with the right lender and meeting their qualification criteria you’ll be better positioned to leverage your investment property’s equity for future growth opportunities.
