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I've read that you have to have atleast 20% of your home's value paid to qualify for a HELOC. True?

We are looking to purchase a house for about 100k or less and would have a 20% down payment for up to 100k. We know we want to do immediate renovations on a home before we move in, but would have to qualify for a loan to do so. My research has told me that a HELOC would work best for this, but I'm curious on how to be sure if we would qualify. We would like to have around 100k to do renovations with. Would the home's purchase price affect the amount of credit available to us?
  • May 05 2012 - Jensen Beach
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Answers (2)

I would put down less money and hold onto your cash for home improvements.

You should also look into the FHA 203k loan. This loan allows you to finance the cost of the improvements in with the base loan amount.

Ask a lender licensed in your state to give you details about FHA and see if that makes sense for you to go that route.

It's going to be hard to find a lender to give you a HELOC after you purchase with 20% down.
  • May 05 2012
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You should be looking into renovation purchase loans such as 203k or you should look to make a lower down payment to save cash for your improvements. Understand that a second position loan such as HELOC is by nature riskier to lender and your concept of pulling cash out right after purchase is ill-advised.
  • May 05 2012
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