First-Lien HELOC
First-Lien HELOC: A Line of Credit That Can Be Your First Mortgage
Most people think of a HELOC as borrowing against a home they already own. A first-lien HELOC works differently.
For eligible buyers, a first-lien HELOC can finance the new home itself. It is secured by the home being purchased and sits in first position. There is no traditional mortgage ahead of it.
- In first position on the home it finances
- For primary residences and second homes
- Variable-rate line of credit
Available for properties in MD, DE, PA, VA, DC, NC, and FL. Not available in Texas. Subject to credit and property approval.
How can a HELOC be the first mortgage?
“First lien” and “first position” mean the same thing. They describe which loan comes first when more than one loan is secured by the same property.
A HELOC is commonly used as a second lien behind an existing mortgage on a home the borrower already owns.
A first-lien HELOC is recorded in first position instead. The line of credit is the primary financing on the property, not an add-on to it.
Common HELOC structure
- Secured by
- A home you already own
- Lien position
- Behind an existing mortgage
- Role
- Additional financing behind the existing mortgage
First-lien HELOC
- Secured by
- The home it finances
- Lien position
- First position
- Role
- The primary financing on the property
Buying your next home with a first-lien HELOC
For a homeowner who qualifies while still owning their current home, a first-lien HELOC may be used to buy the next home. If the current home later sells, the sale proceeds may be used to reduce the HELOC balance.
- You own your current home
You are ready to move, and your current home has not sold yet.
- You find your next home
The right home comes along before your current one sells.
- You qualify
If eligible, you qualify while still owning your current home.
- The first-lien HELOC finances the new home
It is secured by the new home and is the first-position financing on that property.
- Your current home sells
You may use the sale proceeds to reduce the HELOC balance.
A HELOC on your current home, a second loan layered on top of a new mortgage, or a bridge loan.
Your current home still counts
Until your current home sells, it stays part of the picture. Its mortgage, taxes, and insurance remain your responsibility, and how they factor into qualification is reviewed as part of your scenario.
Every scenario is different. Qualifying before you sell depends on your full financial picture, and buying first does not guarantee a particular offer structure or closing timeline.
Would you rather use the equity in your current home to buy? Our Buy Before You Sell solution is a separate structure with its own requirements. We can help determine which structure fits your scenario.
Already own your home?
A first-lien HELOC may also be an option when refinancing a home you already own, with the HELOC serving as the first-position financing on the property.
Whether that structure fits depends on your existing loan, your equity, and your overall scenario. We can walk through it with your actual numbers.
If you would rather keep your current mortgage in place and borrow against your equity, our standard HELOC sits behind your existing loan.
Virginia: By refinancing your existing mortgage, your total finance charges may be higher over the life of the loan.
From first conversation to closing
- Tell us your scenario
The property, how you will use it, where it is, and what you want the financing to do.
- We review the fit
Credit, income, assets, property type, and whether a variable-rate line of credit suits your plans. If another product fits better, we will say so.
- Apply and underwrite
Full credit and property approval is required.
- Close
The line is opened and secured by the property in first position.
Who might want to ask about a first-lien HELOC
You want to explore buying before your current home sells.
You are buying a second home and want to understand line-of-credit financing for it.
You want to compare a line of credit with a traditional fixed-rate mortgage.
You want to know whether a first-lien HELOC could be an option on the home you already own.
You have a client in one of these situations and want an honest read on whether this could work. Introduce us to your buyer
Good to know
- The rate is variable. It can change over time, so your payment can change.
- Primary residences and second homes. This first-lien HELOC is offered for primary residences and second homes.
- Available in MD, DE, PA, VA, DC, NC, and FL. Not available in Texas.
- Not every property type qualifies. Full credit and property approval is required.
Another option may fit better if
- You want a fixed rate for the life of the loan. Our home loan options include fixed-rate mortgages.
- The property is a rental or investment property. Our Investor HELOC is built for those properties.
- The property is in Texas. This HELOC is not available there, and we can review other financing options with you.
First-lien HELOC questions
What is a first-lien HELOC?
A first-lien HELOC is a home equity line of credit recorded in first position on a property. No other mortgage sits ahead of it. It is also called a first-position HELOC or a 1st lien HELOC.
How does a first-lien HELOC work?
You are approved for a line of credit secured by the property, and the line is recorded in first position. In a purchase, the line finances the home being bought. The rate is variable. We can walk you through how the line would work for your scenario.
Can a HELOC be your first mortgage?
Yes, for eligible borrowers. When a HELOC is in first position, it is the primary financing on the property, not a second loan behind another mortgage.
Can you use a HELOC to buy a house?
People mean two different things by this. The more common one is borrowing against a home you already own and putting those funds toward another purchase. That is a traditional HELOC on your current home.
A first-lien HELOC is different. It is secured by the new home and is the first-position financing on that home.
Can I buy my next home before selling my current one?
It may be possible if you qualify while still owning your current home. With a first-lien HELOC, the new home secures the line. After your current home sells, you may use the proceeds to reduce the HELOC balance. Qualification and timing depend on your full scenario.
Can a first-lien HELOC be used to refinance?
It may be an option when refinancing a home you already own, with the HELOC serving as the first-position financing on the property. Whether that structure fits depends on your existing loan, your equity, and your overall scenario.
Virginia: By refinancing your existing mortgage, your total finance charges may be higher over the life of the loan.
Is the rate fixed?
No. A first-lien HELOC has a variable rate, so the rate and your payment can change over time. If you want a fixed rate for the life of the loan, a traditional fixed-rate mortgage may be a better match.
Is this a bridge loan?
No. In this structure, the first-lien HELOC is secured by the home being financed and serves as the first-position financing on that property. Federal Hill Mortgage also offers a separate Buy Before You Sell solution, and we can help determine which structure fits your scenario.
What properties and locations are eligible?
Primary residences and second homes in MD, DE, PA, VA, DC, NC, and FL. Not available in Texas. Rental and investment properties are not eligible for this product; see our Investor HELOC. Not all property types qualify.
What funds will I need to buy a home this way?
Purchase financing requirements depend on the borrower, the property, and the overall scenario. We can review the expected funds needed with you.
I'm a real estate agent. How do I introduce a buyer?
Use our introduce-a-buyer form, or reply to the email that brought you here. We will take an honest look at whether this could work for your client.
Ask whether a first-lien HELOC could fit
A short conversation can help determine whether a first-lien HELOC could fit your property, location, finances, and plans, or whether another option may fit better.
If someone on our team sent you this page, you can also reply to their email.
All financing is subject to credit and property approval. Not all applicants will qualify. Not all properties qualify. Programs, rates, terms, and conditions are subject to change at any time without notice. The first-lien HELOC is a variable-rate home equity line of credit; the rate and payment can change. HELOC not available in all states (not available in TX). Virginia: By refinancing your existing mortgage, your total finance charges may be higher over the life of the loan. This page is not a commitment to lend.
