A straight answer
Can I use a HELOC for a down payment?
The direct answer
Yes, you can use a HELOC for a down payment on a house, and I arrange both loans: the home equity line on the home you own now and the purchase loan on the next one.
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, because they represent a return of your own equity. I'm Zach von der Linden (NMLS 1652805), a mortgage broker with West Capital Lending, based in San Clemente. The catch is that the line's payment is counted as a debt when the new loan is underwritten. Both payments have to fit your income. I work with homeowners in California, Utah, Oregon and Arizona.
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 2026-10-19
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.
I want to use the HELOC for a down payment on a new home
Yes, on a conventional purchase. Borrowed funds secured by a home you already own can be an acceptable down payment source, and the line's payment is counted as a debt on the new loan. I arrange the line and the purchase loan.
Selling the current home? See a HELOC on a house listed for sale, using a listed home toward the next down payment, what happens to the HELOC when you sell and how to use your equity to buy before you sell.
What has to be true
- You own a home with equity behind its first mortgage.
- The line is in place before the purchase loan closes, so the purchase lender can document it.
- The purchase lender can document three things. Fannie Mae's guide lists them: "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."
- Your income carries every payment that will exist after closing: the current mortgage, the new line, and the new home's loan.
What the lender checks
- The line's agreement, including its payment.
- The transfer of the money from the line into your account.
- How the payment is counted. Fannie Mae's guide says: "When qualifying the borrower, the lender must consider monthly payments for secured loans as a debt."
- A secured loan without a required payment is still counted. The same section says "the lender must calculate an equivalent amount and consider that amount as a recurring debt."
Why a bank may say no
- A bank may say no because it adds its own rule on borrowed down payment funds on top of the investor's rule. That is the bank's own choice, not a rule every program follows.
- The next home's occupancy changes the file. A primary home, a second home and a rental are underwritten differently.
- The payments together do not fit your income.
What I would check first
- How much equity the current home has after its first mortgage.
- The price range of the next home and the kind of purchase loan you want.
- Whether you plan to sell the current home, keep it, or rent it out. If you plan to sell, the page on a HELOC on a home you plan to sell covers that case.
- Whether the payments fit before you make an offer.
When this may not work
- 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.
- Thin equity on the current home, or payments that do not fit, will stop the plan.
Example
Say you own your current home and like its first mortgage. You find the next home before you sell. A line on the current home is opened and drawn, and the money moves into your account. The purchase lender documents the line's terms and the transfer, counts the line's payment with your other debts, and underwrites the new loan with all of it in view. When the first home sells later, the line is paid off from that sale.
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 equity from my current house as the down payment without selling first?
Yes, on a conventional purchase. That is what a HELOC-for-down-payment plan does: cash from the current home's equity, then you qualify for the new loan with the line's payment included until, or unless, you sell.
Can I use a HELOC for a down payment on a house?
Yes. On a conventional loan, Fannie Mae accepts borrowed funds secured by an asset, such as your current home, as a down payment source. The line's payment is counted as a debt when the new loan is underwritten.
Does the HELOC payment count against me when I buy?
Yes. Fannie Mae's guide says the lender "must consider monthly payments for secured loans as a debt." Plan on qualifying with the line's payment included.
Can I use a HELOC for the down payment on a second home or a rental?
The same Fannie Mae rule covers where the money comes from. The new home's occupancy sets the rest of the requirements. I arrange home equity lines and purchase loans for second homes and rentals.
Do I have to sell my current home first?
No. Using a line is a way to buy first. You qualify for the new loan with your current payments still counted until the old home sells.
Can I use a HELOC for an FHA or VA down payment?
Ask before you plan on it. FHA and VA have their own rules on borrowed funds, and this page quotes only Fannie Mae's.
What happens to the line when I sell my old house?
It is paid off from the sale proceeds at closing and then closed. The page on what happens to a HELOC when you sell walks through it.
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: 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) booklet (checked 2026-09-27) · 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 (3)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| 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 booklet What you should know about home equity lines of credit says: “A home equity line of credit (HELOC) is a loan that allows you to borrow, spend, and repay as you go, using your home as collateral.” It says “Equity is the value of your home minus the amount you owe on your mortgage,” that “When your line of credit is open for spending, you are in the borrowing period, also called the draw period,” that “when the draw period ends you enter a repayment period,” that you “may have to pay the entire balance owed, all at once, which might be a large amount called a balloon payment,” and, twice, that if you fall behind or cannot pay, “you could lose your home.” | CFPB, What you should know about home equity lines of credit (HELOC) booklet | 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 2026-10-19.
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.