Best Non-Owner-Occupied HELOCs

A non-owner-occupied home equity line of credit (HELOC) can offer an avenue for financing expenses for maintenance and repairs versus paying for them from cash flow or savings. 

When a HELOC is non-owner-occupied, it means you own the home you plan to use as collateral for the line of credit, but it isn’t your primary residence. Here’s what to know about this financing option, including where you might get it, how to qualify, and available alternatives.

Reviews of the best non-owner-occupied HELOCs

HELOCs are a common way to tap into your primary residence’s home equity but are less common for non-owner-occupied properties. Lenders may view these lines of credit as having a higher risk of default. 

So, if you want to tap the equity in your investment property to finance a renovation or home improvement project, we’ve researched the best non-owner-occupied HELOCs available. 

Figure

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Best overall HELOC

• Credit lines up to $400,000
• Available for second homes
• Fast closings possible

For borrowers interested in financing a home project in a second home, Figure’s home equity line of credit is worth considering. The figure is a financial technology company founded in 2018. 

As of April 2024, it offers HELOCs in 44 states and Washington, D.C. (Excluded states are  Delaware, Hawaii, Kentucky, New York, Texas, and West Virginia.) Figure leverages artificial intelligence and blockchain technology to simplify and expedite the closing process for borrowers. 

HELOCs as small as $15,000 or as large as $400,000 are available through Figure, and you may be able to close on your loan and get funding in five business days. The largest lines of credit are reserved for borrowers with the best credit. Another caveat: You can’t get a Figure HELOC on a multifamily (two-plus-unit) property. Given that, this option is best for renovating a second home.

We recommend Figure for borrowers planning to use all or most of their line of credit at closing because Figure requires an initial withdrawal of 100% of your credit line (minus fees). As you pay it down, you can borrow again during the two- to five-year draw period.

Spring EQ

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Best multi-product application

• Credit lines up to $500,000
• Available for second homes
• Home equity loans available for 2-unit properties

Spring EQ, founded in 2016, offers HELOCs and home equity loans for qualifying borrowers in 42 states (as of February 2024). Excluded states are Alaska, Hawaii, Idaho, North Dakota, Nevada, New York, South Dakota, West Virginia, and Wyoming.

Its HELOCs are available for second homes, and its home equity loans are available for second homes and two-unit properties. This makes it an option whether you’re planning a home project in your vacation home or need financing to cover the renovation of an investment property.

This lender’s HELOCs range from $50,000 to $500,000, and it indicates most of its loans close within 21 business days. Given this, Spring EQ may be best for those who want to borrow a large amount and don’t mind waiting several weeks for funding. Terms of 30 years are available, with initial draw periods of 10 years. 

How to qualify for a non-owner-occupied HELOC

Lenders can use the same criteria when determining whether to approve someone for a non-owner-occupied HELOC as for a HELOC on a primary home. However, the minimum requirements may be more stringent for an investment property because these lines of credit present a greater risk to the lender. 

Here’s a rundown of what most lenders consider:

• Credit scores. A credit score of 620 to 640 may be sufficient to qualify you for a traditional HELOC. Lenders may bump that to 700 or better for a non-owner-occupied line of credit.
• Loan-to-value ratio (LTV). LTV measures the amount of equity you have in your home. Traditional HELOCs may allow a maximum LTV of 90%, but lenders may cap it at 80% or lower for non-owner-occupied HELOCs. 
• Cash reserves. Your lender may want reassurance that you have funds on hand to cover HELOC payments should you run into financial trouble. You may need to show proof of 12 to 18 months’ worth of expenses in cash reserves, whereas a traditional HELOC may require a smaller amount of savings. 

A lender may also want proof of occupancy by a tenant if the property in question is a rental. 

How to choose the best non-owner-occupied HELOC for you

The selection of lenders for a non-owner-occupied HELOC may be limited, but it’s still important to shop around. Here are some of the main factors to weigh when making a decision. 

• Rates. Interest rates are always a consideration for a home equity line of credit because the rate determines your cost of borrowing. When comparing non-owner-occupied HELOC rates, first look at whether the rate is fixed or variable and then focus on the number itself to see what different lenders offer.
• Maximum LTV. Checking maximum LTV requirements can indicate how much equity you need, at a minimum, to qualify for a non-owner-occupied HELOC. Calculating your estimated home equity can help you narrow down the list of possible lenders you may get approval from.
• Borrower requirements. Borrower requirements can cover credit history and scores, debt-to-income ratio, and cash reserves. Checking your credit scores and calculating your DTI can give you a better idea of whether you meet a particular lender’s guidelines.  

It’s also helpful to consider funding speeds, options for accessing your credit line, and repayment terms. The best HELOC for you is one that fits your budget and delivers cash when you need it. 

Our expert’s advice 

Erin Kinkade

CFP®

I suggest being prepared to pay higher interest rates, even if you have a good to excellent credit score and positive report. In addition, I suggest seeking other options for tapping into equity, such as refinancing (if the interest rate environment is favorable) or comparing personal loan rates and commercial loan rates.

How to apply for a non-owner-occupied HELOC

Once you’ve found a non-owner-occupied HELOC that seems right, it’s time to apply. 

Depending on the lender, you might be able to apply online, in person, or over the phone. It could be useful to speak with a loan officer to explain your situation and get guidance on the application process. 

Your lender may request copies of the following documents to help verify your identity, income, and employment: 

• Driver’s license or another government-issued ID
• Pay stubs
• W-2s
• Tax returns
• Utility bills
• Bank statements
• Mortgage statements
• Property tax bill
• Homeowners insurance policy
• Proof of lease or rental agreement (for rental properties)
• Documentation showing rental income

As part of the application process, the lender may ask questions about your primary residence, including:

• What type of mortgage you have
• How much you owe to the loan
• Whether your monthly payment includes property taxes and insurance
• Whether you have any second mortgages outstanding and, if so, the amount 

The lender will likely request an appraisal to determine the value of the property being used to secure the HELOC. You may also be asked about your history as a rental homeowner, if that’s applicable, and how much experience you have with investment properties. 

Alternatives to non-owner-occupied HELOC

If you’re struggling to find a lender that offers a non-owner-occupied HELOC that meets your needs or you don’t qualify, other types of financing may be available.

Financing type	Pros	Cons
HELOC	Flexible credit line Pay interest only on what you borrow	Secured by primary home Variable rates could make borrowing more expensive
Home equity loan	Get funding in a lump sum Fixed rates with predictable payments	Rates may be higher than HELOCs Availability may be limited for investment properties
Cash-out refinance	No need to get a second mortgage Withdraw equity in cash at closing	Rates may be higher than HELOCs Larger mortgage payment
Personal loan	Not secured by property Favorable rates for borrowers with excellent credit	Loan limits may be lower Lower credit scores can result in higher rates
Credit card	Good for smaller home improvement projects Purchases may earn rewards	Credit card APRs can be higher than loan rates Lower credit limits

Home equity loan

Certain lenders may allow you to take out a home equity loan on a rental or investment property but not a HELOC. Like HELOCs, home equity loans allow you to borrow against your home, but you get the funds in a lump sum instead of a credit line. 

Home equity loans may have higher rates than HELOCs. It could be challenging to get one for certain property types. For instance, you may be able to get a home equity loan for a second home but not a three- or four-unit multifamily. Lenders will have different rules, so do your due diligence to find the best home equity loan.

Cash-out refinance

As an alternative to a HELOC, you may be able to tap into your investment property’s equity with a cash-out refinance. This type of refinance involves borrowing a larger amount than you owe on your mortgage and using the difference to cover home projects or other costs. 

You may see higher interest rates or need more equity than for a cash-out refinance on your primary residence. Generally, a cash-out refinance for an investment property is a better option in a low-interest-rate environment. 

Read more: Cash-out refinance vs. home equity loan

Personal loan

A personal loan can be a favorable alternative to a non-owner-occupied HELOC due to its quick disbursement and the ability to use loan funds for many purposes, including home improvement projects. 

They may come with higher rates than a HELOC or cash-out refinance, especially if your credit is less than stellar. But if you have excellent credit, you might be able to qualify for a low-rate loan from one of the best personal loan lenders.  

Credit card with a 0% introductory APR 

If you’re financing a small or inexpensive project, consider applying for a credit card that offers a 0% introductory APR on new purchases. This type of card offers deferred interest for a set time, often 12 to 21 months. 

Ensure you can repay the full balance on the card before the introductory APR expires, or interest charges could add up. Keep in mind that maxing out balances on your cards could be detrimental to your credit scores.