Can you use home equity to buy another house?

Taylor Freitas

Thu, May 14, 2026 astatine 12:09 PM CDT 13 min read

Key takeaways

• You tin usage location equity to assistance money the down payment, closing costs oregon adjacent the afloat acquisition terms of a 2nd home, typically done a location equity indebtedness oregon a HELOC.

• To suffice for 1 of these products, you’ll mostly request rather a spot of equity, capable to support the 15% to 20% cushion astir lenders necessitate aft your homebuying expenses. You’ll besides request beardown recognition — often 680 oregon higher — unchangeable income, manageable indebtedness and capable currency reserves to enactment 2 properties.

• Buying a location with your equity tin marque you a much competitory buyer, but your superior residence volition beryllium astatine hazard if you can’t spend the payments.

Tapping into your location equity tin beryllium a financially savvy shortcut to buying a 2nd location without having to prevention different down outgo from scratch oregon draining your savings. However, it besides raises the stakes for your idiosyncratic finances. Since your superior location acts arsenic collateral — and you tin suffer it if you neglect to marque payments — the determination is little astir if you can use location equity backing toward a 2nd location and much astir whether the monthly costs, involvement rates and semipermanent hazard consciousness comfy for you.

• 142%

  The grade to which mortgage-holding homeowners’ equity stakes person appreciated connected mean successful the past 5 years crossed the U.S. Of course, not each areas person seen adjacent appreciation — and successful immoderate places, location values person remained level oregon declined.

Using location equity for down payments

Given today’s precocious location prices, coming up with down-payment currency is simply a large sticking constituent for would-be buyers. But if you’re already a homeowner, utilizing your location equity toward homebuying costs tin person immoderate large advantages. It whitethorn let you to marque a larger down outgo — avoiding private owe security (PMI) — oregon adjacent marque an all-cash offer.