Its amazing to me the ignorance about this loan. Traditional HELOCs have been dangerous in the past, especially when the LTV was 100%. This loan requires at least 80% LTV, and as mentioned below, the borrower must have positive cash flow. The difference in net income vs. expenses automatically pays down the loan, thus constantly reducing principle and monthly payment. Plus. your money is always liquid. Somebody said below to just pay more principle in your traditional loan, but then that money is not liquid. Traditional loans were created in the 1930's so people could afford to stay in their homes - they are antiquated and home owners end up paying as much in interest as they do for the home. Banks don't like these loans because they don't make as much money off of them, but if you do some research, you will find it very popular in Europe and Australia.