Can You Get A HELOC On A Rental Property? (2026)

How a HELOC Works on a Rental Property

A HELOC is a revolving line of credit (similar to a credit card). When you access funds, you borrow against equity in your home.

Most HELOCs have two periods:

• Draw Period (Usually 5-10 Years): You withdraw funds and make interest-only payments.
• Repayment Period (Usually 10-20 Years): You can no longer withdraw funds, and you must repay principal and interest.

Like home equity loans, HELOCs have lower interest rates than many kinds of unsecured credit. But there’s a tradeoff; if you can’t pay, the lender can seize the home.

HELOC Requirements for Investment Properties

Many lenders have stricter requirements for investment property HELOCs.

Credit Score

Most lenders require you to have a credit score of at least 680 for a HELOC on a primary residence. However, for a HELOC on an investment property, most require a score of at least 720.

Borrowing Ability

You can usually borrow up to 85% of a home’s value for a primary residence, but many lenders only let you borrow 70% to 75% of an investment property’s value.

Debt-to-Income (DTI) Ratio

Lenders want to make sure you can comfortably afford the extra monthly payments that come with a HELOC. If you’re a landlord, they’ll factor in rental income from the property into your DTI.

Investment Property HELOC Rates

Lenders see HELOCs on investment properties as riskier, so they have higher interest rates. Generally, HELOCs on rental properties have rates 0.5-1.0 points above those for owner-occupied properties.

How to Apply and Where to Find Lenders

Many credit unions and mid-sized or regional banks offer HELOCs for investment properties. You may also be able to find specialized lenders who focus on loans like these.

Tax Rules for Rental HELOC Interest

Figuring out how to calculate tax on rental income can be a challenge. If you get a HELOC on a rental, the interest is tax-deductible. However, you must show that you used the funds to purchase or improve the property.

Pros and Cons of a Rental Property HELOC

These are a few advantages of rental property HELOCs:

• You only pay interest on money you borrow.
• Rates are usually lower than unsecured credit.
• You only make interest payments during the draw period.

There are a few drawbacks to consider as well:

• If you can’t pay, the lender may foreclose.
• Rates are usually variable, so you may pay more than you planned to.

Compare options before you apply! Rates and terms can vary significantly between lenders.

Alternatives to a Rental Property HELOC

If you’re wondering how to buy a rental property or want to improve your current property, rental property HELOCs are only one option. Home equity loans, cash-out refinances, personal loans or even a HELOC on your primary residence could all help you get closer to your financial goals.