Yes, you can use home equity to buy another house without selling the first one. You borrow against the equity, or sell a slice of its future value, and the cash becomes your down payment.
The part people skip is the monthly budget. A new mortgage payment is coming, so a second payment from the equity cash makes the whole plan tighter. Point offers a home equity investment on your current home that Point says has no monthly payments and no income requirements. A HELOC from Figure is the lower-cost route if you can carry the payment. Here’s how the four ways compare.
Quick answer
You want the down payment without adding a monthly payment, or your credit or income paperwork makes a HELOC hard.
You have steady income, a credit score of 600 or more, and room in the budget for a second payment.
Point serves 30 states plus D.C., and availability varies by county. Each button checks your state first.
The four ways to use home equity to buy another house
Every option turns equity in the home you own into cash for the one you want. They differ in what they do to your monthly payment, who gets approved and what you give up.
| Way | Monthly payment | What you need | The catch | See your number |
|---|---|---|---|---|
| HELOC | Yes | Credit score of 600 or more and verified income (Figure) | Adds a second monthly payment while you also carry the new mortgage | Check My Figure Rate |
| Home equity investment | None | Point starts at a 500 credit score, no income requirements | A lien on your home and a share of its future appreciation at settlement | Get My Point Offer |
| Cash-out refinance | New, larger payment | A full mortgage approval | Replaces your current mortgage, including its rate, on the whole balance | Ask your lender |
| Bridge loan | Varies by lender | Income and equity, and a plan to sell the current home | Short-term and meant for people selling, so costs add up fast if the sale drags | Ask your lender |
Point’s program details are from Point. Figure’s are from Figure. Your own offer is the only number that counts.
HELOC: the cheaper way to use home equity for a down payment
A HELOC is a line of credit against your home. You draw the cash, put it toward the new house and make a monthly payment. Figure lists a credit score of 600 or more in most states (640 in a few), a soft-pull rate check, and funding in as few as 5 days. The origination fee is up to 4.99%, and the full amount is drawn at closing. Our Figure HELOC review walks through it, and the best HELOC lenders page has the others.
The trade is the payment. When you apply for the new mortgage, the lender looks at your monthly debts, and the HELOC payment is one of them. If your income is strong, that’s fine. If the new mortgage already stretches you, a second payment might be the thing that gets you a smaller offer or a no.
Home equity investment: cash for the down payment with no added payment
A home equity investment (HEI) gives you cash now in exchange for a share of your home’s future value. There’s no monthly payment, so nothing gets added on top of the new mortgage. Our guide to getting equity out of your home without a loan covers how it works.
Point funds $30,000 to $600,000 on a 30-year term. It starts at a 500 credit score (scores under 600 max out at $500,000), and it says there are no income requirements. Your home needs to be worth $155,000 to $4,500,000. For a score of 550 or higher, Point can fund up to about 71% of your home’s value combined with your mortgage (67.5% for 500 to 549). The fee is up to 4.9% with a $2,000 minimum. Point’s return is a share of your home’s future appreciation, and you settle when you sell, refinance or reach the end of the term. Read the Point review before you apply.
Because there’s no payment, lenders have nothing monthly to count from this cash. How your mortgage lender treats the lien and the source of the down payment is still up to them, so tell your loan officer what you’re planning before you apply.
An example with exact math
Say you need $60,000 for the down payment. These numbers are an example, not a quote. They show the most each fee could be, if it comes out of the amount.
| $60,000 example | Fee | Left after fee | Monthly payment |
|---|---|---|---|
| Figure HELOC | $2,994 | $57,006 | Yes |
| Point HEI | $2,940 | $57,060 | None |
Our arithmetic. $60,000 times 4.99% is $2,994. $60,000 times 4.9% is $2,940, which clears Point’s $2,000 minimum. Closing items and your actual fee are in your offer.
The fees land close together. The real difference is that the HELOC charges you every month and the HEI charges you later, out of your home’s appreciation. A 30-year term gives that share a long time to grow. If you plan to sell within two or three years, the upfront cost doesn’t have time to pay for itself, so skip it.
Two other companies are worth a quote. Hometap could invest $15,000 to $600,000 over a 10-year term, among other qualifying criteria, if your home is located in an eligible state. Credit from 575 and at least 25% equity could qualify you. You settle the investment when the term ends or sooner. Splitero offers $50,000 to $600,000, up to 25% of your home’s value, from a 500 credit score, with a 4.99% origination fee and no income documents. It covers 17 states. Our best home equity investment companies roundup lines them up.
Cash-out refinance and bridge loans: usually not the move
A cash-out refinance replaces your whole mortgage with a bigger one and hands you the difference. The problem is the rate. If your current mortgage rate is low, you give it up on the entire balance to get cash on a piece of it. Do the math on the full new payment before you consider it.
A bridge loan is short-term financing secured by your current home, built for people who are selling it. If you’re keeping the home, it’s the wrong tool. If you are selling, ask each lender for every cost in writing and what happens if the sale takes longer than planned.
Home equity to buy investment property
The same options work when the next house is a rental. A HELOC or a home equity investment on the home you live in funds the down payment, and then the rental’s income helps pay for the new mortgage.
Point can also work on a rental you already own. Non-owner-occupied properties max out at 60% of home value combined with your mortgage, versus about 71% on a home you live in. Point handles 1 to 4 unit homes, condos and PUDs, and it doesn’t take manufactured homes, co-ops or LLC-owned homes. Mortgage lenders also treat an investment property differently from a primary home. Ask yours what they require before you count on the equity cash. If you’re self-employed, our home equity for self-employed guide covers the income side, and the home equity calculator shows how much you might have to work with.
Which one fits you
You have solid income and can carry two payments
Price a HELOC first. Figure gives a soft-pull rate check, and it’s usually the lower-cost route if the budget holds.
The new mortgage already takes most of your budget
A home equity investment adds no monthly payment. Point starts at a 500 credit score and says it has no income requirements.
Your current mortgage rate is low
Skip the cash-out refinance. Keep that rate and take the equity another way.
You’re selling the old home soon
You don’t need to borrow against it for long. Talk to a lender about a bridge loan, and skip an HEI.
Not sure which side you’re on? The HELOC alternatives page compares what’s out there.
Check your numbers
Looking is free and doesn’t obligate you. Get one number from each side, then put the cash next to the monthly payment.
Using Home Equity to Buy Another House FAQs
You have four main ways: a HELOC, a home equity investment, a cash-out refinance or a bridge loan. A HELOC adds a monthly payment. A home equity investment, like Point’s, has no monthly payment. A cash-out refinance replaces your current mortgage and rate, and a bridge loan is short-term financing for people who are selling.
Often yes, but check with your mortgage lender first. Figure lists a credit score of 600 or more in most states and funding in as few as 5 days. The monthly payment counts as a debt when you apply for the new mortgage.
Yes. You can use equity from your own home or from a rental you already own. Point works on non-owner-occupied properties too, up to 60% of home value combined with your mortgage. Your mortgage lender sets its own rules for investment property, so ask before you commit.
Point says there are no monthly payments, so there’s no new payment to add. Each mortgage lender decides how it treats the lien and the cash, so ask yours before you apply.
Figure’s HELOC starts at 600 in most states. Point starts at 500, and scores under 600 max out at $500,000. Hometap could consider scores from 575, among other qualifying criteria, if your home is located in an eligible state. Splitero starts at 500.
