✓ Up to 80% CLTV with your first mortgage in place
✓ Non-owner occupied and rental properties eligible
✓ Title the line in your personal name or your LLC
✓ Interest is charged only on the amount you draw
Federal Hill Mortgage Company, LLC | Company NMLS #176351 | Broker and lender licensed in MD, DE, PA, VA, DC, NC, TX, and FL | Equal Housing Lender
Yes, you can get a HELOC on an investment property. Federal Hill Mortgage places home equity lines of credit from $50,000 to $250,000 on non-owner occupied one-unit through four-unit residential properties, including long-term rentals, townhouses, PUDs, and warrantable condominiums, in Maryland, Delaware, Pennsylvania, Virginia, Washington D.C., North Carolina, Texas, and Florida. The line can be titled in your personal name or in the name of the LLC that holds the property. Because it sits in second position, your existing first mortgage stays exactly as it is, at the rate and term you already have.
Investment Property HELOC Eligibility
Most investors can tell within a minute whether this line of credit is a fit. Here is what we look at first.
The property is non-owner occupied. A rental you lease to tenants, a property held for appreciation, or a unit in a small multifamily building all qualify. This is not a product for the home you live in. For your primary residence, see our standard HELOC.
The property is in Maryland, Delaware, Pennsylvania, Virginia, Washington D.C., North Carolina, Texas, or Florida. We cannot place home equity financing outside these eight states.
One to four unit residential, townhouses, PUDs, and warrantable condominiums are eligible. Co-ops, leasehold properties, and manufactured homes are not.
Your first mortgage balance plus the new line stays at or below 80% of the property's value. Example: On a property worth $400,000 with a $200,000 first mortgage, that points toward a line of up to $120,000.
A minimum FICO score of 680. Your score also factors into pricing, so a stronger profile affects the rate you are offered, not just the approval.
Lines run from $50,000 to $250,000. If the equity in a single property does not support at least $50,000, a line on that property will not work, though a different structure may.
The property is titled in your personal name or in an LLC. If it is held in an LLC, we can title the line to the LLC as well. See the LLC section below for what that requires.
If your property clears these, the next step is the application. It takes about five minutes and you will hear back from a Federal Hill Mortgage loan partner within two business days with the options available for your specific property, credit profile, and equity position.
An investment property HELOC is a revolving line of credit secured by a property you own but do not live in. It works the way a credit card works, not the way a mortgage works. You are approved for a maximum amount, you draw what you need when you need it, you pay interest only on the balance you have actually drawn, and as you repay principal that availability comes back.
The line records in second position behind your existing first mortgage. Nothing about that first mortgage changes. If you locked a rate in 2020 or 2021 that you have no intention of giving up, this is the practical difference between a HELOC and a cash-out refinance: the HELOC leaves the low rate alone and prices only the new money.
The structure is a 5-year draw period followed by a 10-year repayment period, a 15-year term in total. During the 5-year draw you make interest-only payments on whatever balance you have outstanding, which keeps the carrying cost low while a line sits unused or partially drawn. When the draw period ends, the line converts to repayment and payments cover both principal and interest over the remaining 10 years. Your payment will increase at that conversion, and it will also increase as you draw additional funds.
Plan around that 5-year mark rather than being surprised by it. Investors who use these lines well tend to treat the draw period as the window to deploy and recover the capital, so that the balance is retired or refinanced before the amortizing payment begins.
The rate is variable and moves with the Prime Rate. Your specific rate depends on your credit profile, the combined loan-to-value on the property, and the property type, so we quote it against your actual file rather than publishing a number that would not apply to you.
Applying for an Investor HELOC with us is a straightforward affair.
Join them and experience the benefits firsthand.
Yes. A tenant-occupied rental is one of the most common properties we place these lines on. Most large retail banks either decline non-owner occupied home equity requests outright or route them into a commercial product with different terms, which is why investors often hear no several times before finding a lender who does this routinely.
The underwriting is different from a primary residence HELOC in three ways worth knowing before you apply:
The equity requirement is tighter. Where a primary residence line might reach 85% or 90% combined loan-to-value, an investment property line is capped at 80%. You need meaningfully more equity in the property to make the math work.
Rates run higher than a first mortgage. A HELOC sits in second position, which means that in a foreclosure the first mortgage is repaid before anything reaches the second lienholder. Non-owner occupancy adds risk on top of that. Pricing reflects both.
Documentation reflects the rental. Requirements vary by borrower and property profile. When rental income is used, you may be asked for your most recent tax return including Schedule E, and a current lease where one applies. For other financed properties you own, we may request mortgage statements, property tax and insurance information, and HOA details where applicable. Depending on your situation, standard underwriting may also call for personal or business tax returns, asset and reserve statements, and self-employment verification.
What does not change is the property itself. A single-family rental, a townhome you lease, a PUD, a warrantable condominium, or a unit in a two to four unit building are all workable, provided the property is in one of our eight licensed states and the equity supports a line of at least $50,000. Co-ops, leasehold properties, and manufactured homes are not eligible.
If the property is held in an LLC, the line can be titled to the LLC rather than to you personally. Most lenders will not do this, which is why investors who have deliberately structured their holdings into entities frequently cannot find home equity financing at all.
Here is what titling to an entity requires:
The LLC must be in good standing. Current registration with the state where it is organized, and current registration in the property’s state if those differ.
Organizational documents are required. Articles of organization and the operating agreement, so we can confirm who has authority to bind the entity.
A personal guaranty is required. The LLC holds title, but underwriting looks through to the individual members’ credit and financial profiles, and the members guarantee the line personally. An LLC with no operating history does not change the credit analysis, and it does not shield the members from the obligation. If the entire point of the entity for you was to avoid personal recourse, this is the part to understand before you apply.
A business deposit account is required before closing. The line funds into a business account that must be open and established prior to closing. Your loan partner will walk you through this early, because it is a common cause of late-stage delay when it is left to the end.
The entity should match title. The cleanest file is one where the LLC already appears on the deed. If the property is currently in your personal name and you are considering moving it to an LLC, talk to us before you transfer, because the timing of a transfer relative to the application affects the file.
If you own several properties across multiple entities, lines can be placed on more than one property. Each is underwritten on its own equity position and the analysis considers your overall exposure.
The most common use we see is not renovation. It is the down payment on the next acquisition.
An investor with equity in a stabilized rental opens a line, leaves it undrawn, and draws when a property comes up. Interest is charged only on what you actually draw. Because the funds are already in place, the offer does not need a financing contingency on the down payment. And because the line revolves, repaying the balance after you refinance the new property restores availability for the next one.
Other uses we place lines for regularly:
The process for getting an Investor HELOC is simple.
Federal Hill Mortgage has served borrowers since 2005. We are a broker and lender licensed in Maryland, Delaware, Pennsylvania, Virginia, Washington D.C., North Carolina, Texas, and Florida. The firm is led by Tammy Saul, JD, MBA, who personally originates and holds Individual NMLS #175722.
Working with a broker rather than a single retail bank matters on this specific product. Non-owner occupied home equity is a narrow lane. A retail bank offers one set of guidelines and declines anything outside them. We place these lines through the lending sources Federal Hill Mortgage has access to, which means a property that does not fit one set of guidelines can often be structured through another.
Read client reviews, or see where we are licensed.
Our home equity products are currently available in the following states: Maryland (MD), Delaware (DE), Pennsylvania (PA), Virginia (VA), Washington D.C. (DC), North Carolina (NC), Texas (TX), and Florida (FL). If your property is located outside of these areas, we unfortunately aren’t able to offer home equity financing at this time.
Once you’ve completed the Home Equity Questionnaire, you can expect a response from us within 2 business days. Our team is dedicated to reviewing your details promptly and providing recommendations on the best home equity product tailored for your needs.
Timelines vary with appraisal turn times, title work, and how quickly documentation is returned. Files that move efficiently can close in approximately two to three weeks from application, but this is not a guaranteed timeline and your loan partner will give you a realistic estimate for your specific file.
No, the Home Equity Questionnaire is not the actual loan application. It’s a complimentary preliminary service we offer to help you identify which home equity product might be the best fit for your needs. There are no fees associated with submitting the questionnaire or receiving our recommendations. If you decide to proceed with a product we suggest, the actual loan application process will follow, and any associated fees or costs will be detailed at that time.
Both HELOC (Home Equity Line of Credit) and HELOAN (Home Equity Loan) are ways to tap into the equity of your home, but they function differently. A HELOC provides a revolving line of credit, allowing you to borrow, repay, and borrow again, much like a credit card, usually over 5-10 years. In contrast, a HELOAN gives you a lump sum amount upfront, which you repay over a fixed term. HELOCs typically have variable interest rates that can fluctuate, while HELOANs offer fixed rates.
Second mortgages, such as HELOCs and HELOANs, often come with higher interest rates due to increased risk factors. In the event of a foreclosure, the first mortgage has priority for repayment, leaving second mortgages at a higher risk of not being fully repaid. Moreover, second mortgages add an additional layer of debt on top of the primary mortgage. As a result, to compensate for these risks, second mortgages generally have higher interest rates.
For a HELOC, during its draw period (typically 5-10 years), you usually make interest-only payments based on your outstanding balance. Once this period concludes, you enter a repayment phase where you repay both the principal and interest over a set term, usually spanning 10-20 years. In contrast, a HELOAN starts with a fixed repayment term where you make consistent monthly payments covering both the principal and interest over the loan’s duration.
Our Investor HELOC comes with a variable interest rate, primarily based on the Prime Rate. The exact rate offered to you will be influenced by several personal financial factors, including your credit score, credit history, and the loan-to-value ratio of your property. This approach ensures that the rate is reflective of both the current market trends and your individual financial situation. We encourage you to get in touch with our team for a more personalized rate based on your specific circumstances.
The Investor HELOC is structured as a 15-year term: a 5-year draw period followed by a 10-year repayment period. During the 5-year draw, payments are interest-only on your outstanding balance. When the draw period ends, the line converts to repayment and your payments cover both principal and interest over the remaining 10 years, which means your payment will increase at that point. Because the rate is variable and tied to the Prime Rate, your payment can also change as Prime moves and as you draw additional funds.
Yes. Non-owner occupied properties are the specific purpose of this product. Rentals leased to tenants, properties held for appreciation, and units in two to four unit buildings are all eligible, provided the property is located in one of our eight licensed states, the combined loan-to-value stays at or below 80%, and the equity supports a line of at least $50,000. Townhouses, PUDs, and warrantable condominiums qualify. Co-ops, leasehold properties, and manufactured homes do not.
Yes. A home equity loan on an investment property advances the full amount at closing as a lump sum with a fixed rate and a fixed repayment term, rather than a revolving line you draw against. Which one fits depends on whether you know the amount you need today. A defined renovation budget or a debt payoff usually suits a home equity loan. Down payment funds you want available but not yet drawn usually suit a line of credit. Tell us the use on the questionnaire and we will show you both.
A cash-out refinance replaces your existing first mortgage with a new, larger one, which means the rate on your entire balance resets to today's pricing. A HELOC leaves the first mortgage untouched and prices only the new money in second position. If your first mortgage carries a rate meaningfully below current market, a refinance means giving up that rate on the full balance to access equity. The HELOC rate is higher than a first mortgage rate, but it applies only to what you draw. Running both numbers on your actual balance is usually the fastest way to see which costs less over your holding period, and your loan partner can do that with you.
Yes, in two ways. The rate is variable and tied to the Prime Rate, so your payment moves as Prime moves. Separately, payments are interest-only during the 5-year draw period and then convert to principal and interest for the 10-year repayment period. Your payment will increase at that conversion, and it will also increase as you draw additional funds.
The LLC must be in good standing in its state of organization and in the state where the property is located. We will need the articles of organization and the operating agreement to confirm signing authority. A personal guaranty from the members is required, and underwriting reviews the individual members' credit and financial profiles alongside the entity. A business deposit account must also be open and established before closing.
The minimum is a 680 FICO score. Your score also affects pricing, so a stronger credit profile influences the rate you are offered, not just whether the line is approved. Credit is only one input. The combined loan-to-value on the property and the property type factor into both the approval and the rate.
Lines run from $50,000 to $250,000. The amount available on a specific property is limited by the 80% combined loan-to-value ceiling. On a property worth $400,000 with a $200,000 first mortgage balance, 80% of value is $320,000, which points toward a line of up to $120,000. If the equity in a single property does not support at least $50,000, a line on that property will not work, though a different structure may fit.
Yes, and it is the most common use we see. Investors open a line against a stabilized rental, hold it undrawn at no carrying cost, and draw for a down payment when an acquisition comes up. Because the line is revolving, repaying the drawn balance restores the availability for the next purchase.
The questionnaire takes about five minutes and asks for the property, what you owe, and roughly what it is worth. There is no cost to submit it and no obligation. A Federal Hill Mortgage loan partner will come back within two business days with the home equity options available for your specific property and credit profile.
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