If you've built enough equity in your investment property, you may have considered getting a home equity line of credit, or HELOC, to make improvements, consolidate debt or even buy a new property. A HELOC on your investment property lets you borrow against the value of your real estate and access cash as you need it. It’s similar to a credit card, except that your property is the loan’s collateral.
You have 10 years to draw from the loan, during which time you’re typically only required to pay interest, usually at a variable rate. After those 10 years, you can’t borrow any more, and you’ll have to pay back both principal and interest (typically up to 20 years).
A HELOC on an investment property isn’t offered by all lenders, and there are strict qualification requirements. Depending on your needs, you may have other funding options to choose from.
Requirements for a HELOC on an investment property
Getting a HELOC on your investment property can be more difficult than getting a HELOC for your primary home because lenders consider default risk to be higher. If you were to run into financial trouble, it’s more likely you would pay the bills for your own home than for your rental property.
As a result, you’ll likely have to pay a higher interest rate (and possibly higher fees) than you would have for a HELOC on your primary property.
Investment property HELOCs also have stricter requirements, though they vary by lender. Here’s how they compare with HELOCs on primary homes:
Where to find a lender that offers HELOCs for investment properties
Once you’ve determined that you can qualify for an investment property HELOC, you'll need to find lenders that offer them.
After the 2008 housing crisis, some lenders tightened their lending standards, making it more difficult to get a HELOC on an investment property, but it’s not impossible.
Seven lenders that offer HELOCs on investment properties appear on our list of the best HELOC lenders. Some of these lenders restrict investment property HELOCs based on location and whether you rent out the home all year.
» MORE: Best home equity lenders
Pros and cons of choosing a HELOC
Like any loan, there are benefits and drawbacks of getting a HELOC on your investment property.
Pros
Less risky than a HELOC on your primary home. Because a HELOC is secured by your home, you risk losing it to foreclosure if you can’t pay. This risk is somewhat mitigated by the fact that you would not be losing the home that you live in full time.
It won’t affect your home’s mortgage rate. Unlike refinancing, using a HELOC to access cash doesn’t require you to change your mortgage rate.
Great deal of flexibility. With a line of credit, you’re borrowing what you need as you need it (up to your limit). If you’re dealing with multiple transactions — say, doing a series of renovations — this flexibility could be convenient.
Cons
Lower borrowing limit. Generally, the maximum loan-to-value ratio is lower for HELOCs on investment properties than on primary homes.
Fewer lender options. Investment properties aren’t eligible with all HELOC lenders, which limits your ability to compare rate offers.
Higher interest rates and fees. Most lenders will charge higher rates and fees on HELOCs for investment properties than on primary homes.
Are HELOCs on investment properties tax deductible?
Through the 2025 tax year, you may deduct HELOC interest payments from your taxes if the loan was used to “buy, build or substantially improve” the home. However, investment properties may not qualify if you don’t use the home yourself for at least part of the year (more than 10% of the days that the home is rented out, or at least 14 days, whichever is longer). Alternatively, the interest may be eligible as a deductible business expense.
If you’re unsure about whether you qualify, speak with your tax professional when you file.
Alternative financing options
You can get an investment property HELOC if you have enough equity and meet lender requirements, but you might have other funding options to choose from.
HELOC on your primary residence
You may be able to tap into the equity in your main home with a HELOC.
Qualification requirements are typically looser for an owner-occupied home than an investment property, and the interest rates may be lower compared with a personal loan. But if you miss the monthly payments, you may be putting your primary home at risk.
Home equity loan
If you have enough equity in your investment property, you may be able to take out a home equity loan.
A home equity loan gives you cash in a lump sum. The loan typically has a fixed interest rates and monthly payments over a specified number of years.
As with HELOCs on investment properties, home equity loans on rental properties aren't widely available and could have higher interest rates than loans on primary homes.
Features of the loan | HELOC | Home equity loan |
|---|---|---|
Loan funding | Borrowers can draw funds as needed, up to a certain limit (typically a percentage of their equity). | Borrowers receive a lump sum at closing (typically a percentage of their equity). |
Terms | Begins with a draw period (typically 10 years) with interest-only minimum payments, followed by a repayment period (often up to 20 years) that requires borrowers to pay back principal and interest. | Repayment periods are often up to 30 years. Minimum payments include both interest and principal. |
Rates | Variable, though some lenders offer a fixed-rate option. | Fixed. |
Lenders |
Cash-out refinance
A cash-out refinance on your rental or other investment property replaces your existing mortgage with a new one for a greater amount than what you currently owe. You get the difference in cash.
Cash-out refinances are usually limited to 70% to 75% of the equity in your investment property. They typically have lower rates compared with a HELOC or a home equity loan. But just as with a HELOC, your property is collateral and there's the danger of foreclosure if you can’t make the payments.
Features of the loan | HELOC | Cash-out refinance |
|---|---|---|
Loan funding | Borrowers can draw from the line as needed, up to the loan limit. | Borrowers receive a lump sum a few days after closing. |
Terms | Borrowers typically have up to 30 years to pay off the loan, including the draw period. The terms of the borrower’s primary mortgage won’t change. | The borrower’s mortgage terms will change. The new repayment period can be up to 30 years. |
Rates | Does not affect the borrower’s primary mortgage rate. | Changes the borrower’s primary mortgage rate. |
Lenders |
Unsecured personal loan
An unsecured personal loan doesn’t require that you put up collateral, like your home or another property. Your finances and credit score will determine if you qualify for the loan.
With unsecured personal loans, you don’t have to make a down payment, and in some cases you can get the money the same day. Be prepared to pay a higher interest rate than you would for a secured loan such as a mortgage or HELOC.
» MORE: The best personal loan lenders
Next steps
A HELOC calculator can help you figure out if you'll qualify for a loan and how much you may be able to borrow. Just enter your property’s value, the outstanding balance on your mortgage and your credit score.
You'll want to consider an investment property HELOC alongside other ways to access cash. For someone who meets the strict requirements and doesn't mind legwork to find a lender, it may be the right fit.
