Most banks will not offer a HELOC on an investment property, but some do — and the terms are stricter than for primary residences.

A HELOC on an investment property is harder to find than one on a home you live in. Most major banks (Chase, Bank of America, Wells Fargo) have stopped offering them or offer them only to customers with very high net worth. The lenders who do offer them typically charge higher interest rates, require more equity in the property, and impose tighter borrowing limits than they would for a primary residence.

The reason is straightforward: a bank sees investment property as riskier. If you stop paying on a HELOC secured by your home, the bank knows you have a personal stake in keeping a roof over your head. With an investment property, the bank assumes you might walk away if the numbers stop working. That risk premium shows up in every term they offer.

Your best options are smaller regional banks, credit unions, and lenders who specialize in investment property financing. Some will work with you if you have substantial equity (often 30 to 50 percent), a solid credit score (usually 700 or higher), and documented rental income from the property.

Key Takeaways

  • Most national banks no longer offer HELOCs on investment properties; those that do require higher equity and charge higher rates than for primary residences.
  • Regional banks, credit unions, and portfolio lenders are more likely to offer investment property HELOCs, though terms vary widely by lender and property type.
  • You will typically need 30 to 50 percent equity in the property, a credit score of 700 or above, and proof of rental income or positive cash flow.
  • Interest rates on investment property HELOCs are usually 1 to 3 percentage points higher than rates on primary residence HELOCs from the same lender.
  • Some lenders offer fixed-rate options instead of variable-rate HELOCs, which may cost more upfront but protect you from rate increases.

Why National Banks Stepped Back from Investment Property HELOCs

Between 2008 and 2012, major banks tightened lending standards across the board after the housing crisis. For investment properties, the pullback was sharper and permanent. Chase, Bank of America, and Wells Fargo all reduced or eliminated investment property HELOC programs because the default rates were higher than they expected and the legal liability was greater.

A HELOC is a revolving line of credit, which means you can borrow, repay, and borrow again. That flexibility is attractive to investors, but it also means the bank has less control over how the money is used and how quickly it gets repaid. If rental income drops or the property loses value, a borrower with a HELOC can simply stop drawing on it — but the bank still holds a second lien on the property.

Today, the major banks that still offer HELOCs on investment properties typically limit them to customers with net worth above $1 million or to properties in their own geographic footprint where they have local expertise. Most require you to have an existing relationship with the bank and to hold other accounts there.

Regional Banks and Credit Unions That Offer Investment Property HELOCs

Smaller banks and credit unions have filled some of the gap. They tend to have more flexibility because they hold loans in their own portfolio rather than selling them off, and they can make decisions based on local market knowledge rather than national risk models.

Credit unions are often a good starting point if you are a member. Many credit unions will offer a HELOC on an investment property if you have been a member for at least two years, have a credit score above 700, and can show that the property generates positive cash flow. Rates are often lower than at banks because credit unions are nonprofit and pass savings to members.

Regional banks — those operating in five to twenty states — are more likely to offer investment property HELOCs than national chains. Examples include PNC Bank (in the Mid-Atlantic and Midwest), U.S. Bank (nationwide but with regional lending teams), and various state-specific banks. Each has different requirements, but most want to see 30 to 40 percent equity and will charge 0.5 to 2 percentage points above their primary residence rate.

To find regional banks in your area, start with your state banking association or ask your current mortgage lender whether they offer HELOCs on investment properties. Many lenders will refer you to a sister company or partner if they do not offer the product themselves.

Portfolio Lenders and Specialty Investment Property Lenders

A portfolio lender is a bank or mortgage company that keeps loans on its own books rather than selling them to investors. Because they hold the risk themselves, they can be more flexible about investment property lending.

Portfolio lenders often offer HELOCs on investment properties with terms that national banks will not touch. They may accept 25 percent equity instead of 40 percent, work with borrowers who have credit scores in the 680 range, or lend on properties in areas where national lenders have pulled back. In exchange, they charge higher rates — often 2 to 4 percentage points above the prime rate.

Some portfolio lenders specialize in real estate investors and understand the cash flow model better than traditional banks. They may also offer other products like bridge loans or construction financing, which can be useful if you are planning to renovate or refinance the property later.

To find portfolio lenders, search for "portfolio lender" plus your state name, or ask other real estate investors in your area which lenders they use. Many do not advertise widely and rely on referrals from brokers and investors.

What Lenders Will Ask You to Prove

Before a lender will offer a HELOC on an investment property, they will want documentation that shows the property is performing and that you can afford to borrow against it. Expect to provide:

  • A recent appraisal of the property (usually within 90 days of application)
  • Two years of tax returns showing your income and the property's rental income or loss
  • Twelve months of bank statements showing deposits from tenants or property management
  • A current mortgage statement for the property
  • Proof of homeowners or landlord insurance
  • Your personal credit report and credit score
  • A personal financial statement showing your total assets and liabilities

Some lenders will also ask for a lease agreement with your tenant or a property management agreement if you use a manager. They want to see that the income is documented and recurring, not a one-time payment or informal arrangement.

If the property is currently vacant or losing money, most lenders will decline. A few portfolio lenders will work with you if you can show a plan to stabilize the property, but they will charge a higher rate and may limit how much you can borrow.

How Much You Can Borrow and What It Costs

The amount you can borrow on an investment property HELOC depends on how much equity you have and what the lender's policy is. Most lenders will let you borrow up to 70 to 80 percent of the property's value minus what you owe on the mortgage. If your property is worth $300,000 and you owe $150,000, you have $150,000 in equity. A lender offering 70 percent LTV (loan-to-value) would let you borrow up to $60,000 on the HELOC.

Interest rates on investment property HELOCs are higher than on primary residence HELOCs from the same lender. As of early 2024, primary residence HELOC rates ranged from 7 to 9 percent depending on the lender and your credit. Investment property rates typically run 8.5 to 12 percent. Portfolio lenders and specialty lenders may charge 10 to 14 percent.

Most investment property HELOCs are variable-rate products, meaning the rate moves with the prime rate. Some lenders offer fixed-rate options, but these usually cost 0.5 to 1 percentage point more. A fixed rate protects you from future increases but locks you in at a higher starting rate.

Annual fees are common on investment property HELOCs. Expect to pay $50 to $300 per year, plus closing costs of $500 to $2,000. Some lenders waive the annual fee if you maintain a minimum balance or draw a certain amount each year.

Alternatives If You Cannot Get a HELOC on Investment Property

If lenders turn you down for a HELOC, you have other ways to tap the equity in an investment property. A cash-out refinance lets you refinance the mortgage for more than you owe and take the difference in cash. Rates are usually lower than a HELOC, but you have to may have access to for a new mortgage and pay closing costs again.

A second mortgage (also called a home equity loan) is a fixed-rate loan secured by your equity. It is easier to get than a HELOC on an investment property because the lender knows exactly how much you owe and when you will pay it back. The downside is that you receive all the money at once and have a fixed payment schedule, so it is less flexible than a HELOC.

Some investors use a blanket loan that covers multiple properties, which can make lenders more comfortable because they see a larger portfolio. Others use a bridge loan to access cash short-term while they arrange permanent financing.

Frequently Asked Questions

Can I get a HELOC on an investment property with a tenant in place?

Yes, and having an active lease with a paying tenant actually makes it easier. Lenders want to see documented rental income, so a signed lease and proof of on-time payments strengthen your application. If the property is vacant, most lenders will decline unless you can show a plan to lease it quickly.

What credit score do I need for an investment property HELOC?

Most lenders require a credit score of 700 or higher. Credit unions and regional banks may work with scores as low as 680 if you have strong equity and documented income. Portfolio lenders and specialty lenders may accept 660 to 680, but will charge a higher rate. A score below 660 will be very difficult.

Can I use a HELOC on an investment property to pay for repairs or improvements?

Yes. Many investors use HELOCs to fund renovations, which can increase the property's value and rental income. Some lenders will ask you to document the work and may require inspections, but most do not restrict how you use the money once the line is open.

Do I have to pay taxes on money I borrow from a HELOC?

No. Borrowed money is not taxable income. However, the interest you pay on a HELOC used for investment property may be tax-deductible if the money is used to improve or maintain the property. Consult a tax professional about your specific situation.

What happens to my HELOC if the property value drops?

Some lenders will reduce your available credit if the property loses value significantly. A few may freeze the line entirely. If you have already borrowed against the line, you still owe the balance. To protect yourself, borrow only what you need and keep some credit available in case the lender reduces your limit.