Home Equity

Using equity to buy another property.

Tapping equity in your current home is one of the most common ways homeowners fund a second home or an investment property. The right structure depends on the timeline, the new property's purpose, and how much certainty you need on payment.

HELOC for flexible purchasing

A HELOC on your current home gives you flexible access to funds, often without a hard timeline to use them. That can be useful when you are still shopping or want a contingency-free offer. You pay interest only on what you draw.

Cash-out refinance for a clean reset

If your current first mortgage no longer fits your situation and you want to fund a sizeable down payment now, a cash-out refinance can deliver the funds and reset the loan in one step.

Plan around the new property's loan

Investment property loans and second-home loans have their own rules around down payment, reserves, and rate. Stack the full picture, your equity-tap loan plus the new purchase loan, before you commit to either.

Frequently asked questions

Can I use a HELOC for the down payment on another home?

Yes, HELOCs are commonly used for down payments on second homes or rentals. Lenders will count the HELOC payment in your debt-to-income ratio when underwriting the new loan.

Is a cash-out refinance better for this?

Sometimes. A cash-out gives you a lump sum at a fixed rate. A HELOC keeps flexibility. The choice depends on your existing first mortgage rate and how quickly you need the funds.

What about a bridge loan?

Bridge loans use the equity in your current home to buy the next one before you sell. They're short-term and more expensive, useful in fast markets where timing matters.

Related glossary terms

HELOC vs. Cash-Out Guide

Compare three loan structures, calculate potential access, stress-test variable rates and use a fillable comparison worksheet.

Download free guide (PDF)

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