A straight answer
Can I use the equity in my listed home for the down payment on my next house?
The direct answer
Often, yes. A line on the listed home can go toward the next down payment, and it is paid off from the sale at closing. I arrange these. I'm Zach von der Linden (NMLS 1652805), a mortgage broker with West Capital Lending, based in San Clemente. I work with homeowners in California, Utah, Oregon and Arizona.
Fannie Mae's Selling Guide says borrowed funds secured by an asset, such as a home you already own, are an acceptable source of funds for a down payment. The line's payment is counted as a debt when the new loan is underwritten, and the line I arrange can close while the home is still listed.
Approval is subject to borrower, property, and program verification. Under-contract eligibility is a separate question that is confirmed with the lender before you count on it.
Zach von der Linden, mortgage broker and Branch Manager, West Capital Lending · NMLS 1652805
Wholesale pricing · California, Utah, Oregon and Arizona
5.0 across 66 reviews on Experience.com (read on 2026-09-24) · Text reaches Zach directly · Last updated 2026-10-10
This situation is worked out in a short conversation. No credit pull happens from a conversation. The options check is a soft credit pull with no impact on your credit score for the first look. Texts go to Zach's cell.
How it works
- A home equity line is opened on the home you are selling, behind its first mortgage, while the listing stays up.
- The money moves from the line into your account, and the purchase lender documents the line and the transfer.
- The purchase lender counts the line's payment with your other debts when it underwrites the new loan.
- When the listed home sells, the line is paid off from the sale proceeds at closing and closed.
What has to be true
- You own the listed home, with equity behind its first mortgage.
- The home is on the market, not yet under contract. Under-contract eligibility is a separate question, confirmed with the lender before you count on it.
- The line is in place before the purchase loan closes, so the purchase lender can document it.
- Your income carries every payment that will exist after closing: the current mortgage, the line, and the new home's loan.
What the lenders check
- On the line: the listing date and the list price, your credit, your equity and the property, the same as on any line.
- On the purchase: Fannie Mae's guide lists "the terms of the secured loan, evidence that the party providing the secured loan is not a party to the sale, and evidence that the funds have been transferred to the borrower."
- The payment. The same guide says: "When qualifying the borrower, the lender must consider monthly payments for secured loans as a debt."
How this differs from the other pages
Using a HELOC for a down payment covers the general rule for any home you own. The listed-home page covers getting a line while the home is for sale. This page puts the two together: the home is listed, and the line goes toward the next down payment.
If what you need is the purchase itself funded before the sale, not only the down payment, look at a bridge loan to buy before you sell and a bridge loan against the cash-offer program. Buying before you sell lays out the sequence.
If you are self-employed, a line qualified on bank statements reads deposits instead of the net income on filed returns.
Limits
- The rule quoted on this page is Fannie Mae's, for conventional loans sold to Fannie Mae. FHA, VA and other purchase loans have their own rules on borrowed funds. Ask before you plan around one of them.
- A line has up-front costs. The federal HELOC booklet says: "If you are likely to sell your home in the near future, consider whether or not to pay the up-front costs of setting up a line of credit."
- Thin equity on the listed home, or payments that do not fit your income, will stop the plan.
- Nothing on this page is an approval. Every file is confirmed with the lender.
Example
Say your home is listed and you found the next one. A line on the listed home is opened and drawn while the listing stays up, and the money moves into your account. The purchase lender documents the line and the transfer, counts its payment with your other debts, and underwrites the new loan. When the listed home sells, the line is paid off from the proceeds at closing.
State notes
The source-of-funds rule quoted here is Fannie Mae's, and it is not a state rule.
Questions people ask next
Can I use a HELOC on my listed house for a down payment?
Often, yes, on a conventional purchase loan. Fannie Mae accepts borrowed funds secured by a home you own as a down payment source, and the line I arrange can close while the home is still listed. The line's payment is counted as a debt on the new loan.
Does the line have to be paid off before I buy?
No. The line is paid off from the sale proceeds at closing when the listed home sells. Until then, its payment is counted with your other debts on the new loan.
Do I have to take my house off the market?
No. The line I arrange does not require taking the home off the market. Approval still depends on borrower, property and program verification.
What if my house goes under contract first?
That is a separate question, confirmed with the lender. Tell me the closing date and I will check with the lender before you count on anything.
Should I use a bridge loan instead?
It depends on what you need. A line is a second loan behind your current mortgage that you draw on and pay off at the sale. A bridge loan is built around the purchase and the sale as one sequence. Which one fits depends on timing, equity and how the offer needs to read to the seller. I place both.
What clients say
Zach was great. Easy process and he took care of the little things that needed to be done to close the loan and offered up sound advice throughout the process.
Word for word from Experience.com. Read all reviews.
Which page is this?
Cash before your sale. Movers, deposits, two sets of housing payments, and a cushion, funded before your sale closes. The down payment on the next home is one use for that cash, among several.
Can I buy my next home before I sell this one?
That page has the tradeoffs and the same next step: a text to Zach, or the options check with no impact on your credit score for the initial check.
Sources and checked dates
Sources: Confirmed by Zach, September 2026 (checked 2026-09-10) · Fannie Mae Selling Guide, B3-4.3-15, Borrowed Funds Secured by an Asset (10/30/2009) (checked 2026-09-27) · CFPB, What you should know about Home Equity Lines of Credit (HELOC) (checked 2026-09-11) · Confirmed by Zach, Sept 2026 (checked 2026-09-26) · CFPB, What is a HELOC? (checked 2026-09-27).
Show each claim on this page, what it depends on, and the date it was checked (7)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| Zach confirms that he places HELOC financing for eligible homeowners whose homes are already listed for sale. | Confirmed by Zach, September 2026 | 2026-09-10 |
| Zach confirms that the HELOC he arranges does not require taking the home off the market, and that it can close while the home is still listed for sale. | Confirmed by Zach, September 2026 | 2026-09-28 |
| Fannie Mae Selling Guide B3-4.3-15, Borrowed Funds Secured by an Asset: "Borrowed funds secured by an asset are an acceptable source of funds for the down payment, closing costs, and reserves"; the lender must document "the terms of the secured loan, evidence that the party providing the secured loan is not a party to the sale, and evidence that the funds have been transferred to the borrower"; and "When qualifying the borrower, the lender must consider monthly payments for secured loans as a debt." For a secured loan with no required payment, "the lender must calculate an equivalent amount and consider that amount as a recurring debt." | Fannie Mae Selling Guide, B3-4.3-15, Borrowed Funds Secured by an Asset (10/30/2009) | 2026-09-27 |
| The CFPB’s HELOC booklet says: “If you sell your home, you are generally required to pay off your HELOC in full immediately. If you are likely to sell your home in the near future, consider whether or not to pay the up-front costs of setting up a line of credit.” | CFPB, What you should know about Home Equity Lines of Credit (HELOC) | 2026-09-11 |
| Zach places bridge loans for homeowners buying the next home before selling the current one. | Confirmed by Zach, Sept 2026 | 2026-09-26 |
| Zach arranges a home equity line for self-employed owners that can be qualified on bank statements, which reads deposits instead of the net income on filed returns. | Confirmed by Zach, September 2026 | 2026-09-27 |
| The CFPB describes a HELOC as an open-end line of credit for borrowing repeatedly against home equity, says draw and repayment periods vary, and warns that falling behind could cost you your home. | CFPB, What is a HELOC? | 2026-09-27 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last updated 2026-10-10.
Verify him: NMLS Consumer Access, ID 1652805 · 66 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.
Two ways to take the next step
No credit pull happens from a conversation. The options check is a soft credit pull with no impact on your credit score for the first look. Text Zach first so he can review your situation. The online check covers one HELOC program, not every option he may be able to arrange. Texts go to Zach's cell.