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As summer 2025 kicks off, the demand for vacation rentals continues to skyrocket. But how can real estate investors fund these deals—especially when liquidity is tight or rates are high?
One of the smartest strategies right now is tapping into your existing home equity through a Home Equity Line of Credit (HELOC) to fund a vacation rental purchase, renovation, or expansion.
Let’s break down how to use a HELOC for short-term rental (STR) investing, what to watch out for, and how to get started today.
What Is a HELOC and How Does It Work?
A HELOC is a revolving credit line secured by the equity in your primary residence (or sometimes an investment property). It works a bit like a credit card:
- You’re approved for a maximum limit (e.g., $150,000)
- You draw only what you need, when you need it
- You pay interest only on the amount drawn, not the full limit
Most HELOCs offer 10-year draw periods followed by 20-year repayment terms. Many offer interest-only payments during the draw phase, keeping your cash flow strong.
Tip: HELOC rates are typically variable, so they’re best used for short-term financing, flipping, or bridge funding between purchases.
Why Use a HELOC for Vacation Rental Investing?
Here’s why investors are increasingly using HELOCs for vacation rentals:
1. Fast, Flexible Access to Capital
Use your HELOC to make a quick down payment, cover closing costs, or fund renovations without selling other assets.
2. No Need to Sell or Refinance
Don’t want to refinance your existing low-rate mortgage? A HELOC lets you keep that intact while still accessing equity.
3. Tax Deductible Interest (if used for qualified investment property expenses—consult your CPA)
4. Ideal for Short-Term Rental Strategies
Whether you’re buying a beach condo or upgrading an Airbnb cabin, a HELOC can help you move fast before peak summer bookings hit.
Need help finding a HELOC lender? Get matched now.
Example: Using a HELOC to Buy a Summer Airbnb Cabin
Investor: Jason, owns a primary residence with $400K in equity
HELOC Approved Limit: $160K (80% LTV)
Vacation Rental Purchase Price: $350K
Down Payment & Closing: $85K
Renovation Budget: $30K
Total Drawn: $115K from HELOC
Expected Summer Rental Income: $4,500/month
Strategy: Jason uses HELOC funds for the down payment and renovation, then refinances into a DSCR loan after 6 months based on rental income.
HELOC Requirements in 2025
Each lender has unique terms, but here are common 2025 HELOC criteria:
- Equity Needed: Typically 15–20% minimum equity remaining
- Credit Score: 680+ preferred (some accept 640)
- Property Type: Primary residence or 1–4 unit rental (depends on lender)
- Loan-to-Value (LTV): Up to 80–85% of current home value
- Documentation: Income, credit, and appraisal may be required
Submit your loan scenario now to see if you qualify.
Pros and Cons of HELOCs for Vacation Rental Deals
Pros:
- Access capital without selling assets
- Use only what you need
- Interest-only payments (during draw)
- Flexible for down payments, upgrades, or emergency repairs
Cons:
- Variable interest rates
- Monthly payments increase after draw period
- Puts your primary residence or other property at risk
If you’re unsure, consider pairing your HELOC with a long-term strategy like BRRRR investing or a DSCR refinance.
Frequently Asked Questions
Can I use a HELOC for a second home or vacation rental?
Yes, many investors use HELOC funds for down payments, renovations, or even full purchases of STRs.
Will a HELOC hurt my credit score?
Opening a HELOC creates a new credit line and may affect utilization, but responsible use often helps credit long term.
Can I use a HELOC on an investment property?
Some lenders allow this, though rates and terms may be less favorable than primary residence HELOCs.
Can I combine a HELOC with a DSCR loan?
Absolutely. Many investors use a HELOC for upfront costs, then refinance into a DSCR loan for short-term rentals after stabilizing cash flow.
Final Thoughts: HELOCs Are a Summer 2025 Power Play
If you’ve built up equity in your home or portfolio, don’t let it sit idle this summer. A HELOC can be your key to acquiring that dream Airbnb or upgrading an existing rental before peak season ends.
Ready to unlock your equity? Get matched with a HELOC lender now.
Read Next:
- How to Use a HELOC to Buy Your Next Rental Property
- DSCR Loans for Short-Term Rental Properties
- BRRRR Investing Guide
Unlock Your Home Equity with Figure
- 100% online application—no in-person appraisal needed
- Pre-qualify in minutes; funding in as few as 5 days
- Borrow up to $400,000 with flexible terms
- Soft credit check—no impact on your score
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
