A BRRRR (buy, rehab, rent, refinance, repeat) asks for the purchase price and the rehab money up front. No lender refinances the house until the work is done and a tenant is in it, so something has to carry the deal for the first few months.
A home equity line of credit, or HELOC, is one way. You borrow against the equity in a home you already own, spend it on the next house, then pay the line back out of the refinance.
Can you use a HELOC for a BRRRR?
Nothing stops you. Money drawn on a line of credit spends like any other money.
The CFPB describes a HELOC as one that lets you borrow repeatedly against your home equity. HELOCs usually have a variable interest rate, the CFPB says, so your payments may change from month to month. And because the line is secured by the home you live in, the CFPB warns that if you fall behind or cannot repay on schedule, you could lose your home.
That last line is the difference between a HELOC and a loan on the rental. The risk sits on your own address.
What does the HELOC cost on this BRRRR?
The interest is small, because the money is only out for a few months. It is still real.
One house: a $120,000 purchase, a $35,000 rehab, closing costs at 2% of the price, and four months of holding at $800 a month for taxes, insurance and utilities. The finished value is $200,000. Three ways to pay for it: your own cash, a HELOC at an assumed 8.5% with no points covering the price and the whole rehab, or hard money at an assumed 10% with two points, covering 85% of the price and the whole rehab. The rates are the example’s, not quotes.
| All cash | HELOC at 8.5% | Hard money at 10% | |
|---|---|---|---|
| Purchase price | $120,000 | $120,000 | $120,000 |
| Rehab budget | $35,000 | $35,000 | $35,000 |
| Closing costs (2%) | $2,400 | $2,400 | $2,400 |
| Holding costs (4 months at $800) | $3,200 | $3,200 | $3,200 |
| Loan points | – | $0 | $2,740 |
| Interest while you hold it | – | $4,392 | $4,567 |
| Borrowed | – | −$155,000 | −$137,000 |
| Your own cash before the refinance | $160,600 | $9,992 | $30,907 |
These are example figures, not a forecast for any market.
The HELOC asks for $9,992 to start a deal that costs $160,600 all in. That is the appeal. It also costs $4,392 of interest, and the hard-money column pays $2,740 of points on top of its $4,567.
What does the refinance leave in the house?
The refinance pays off whatever carried the purchase, and the gap is your money.
At a $200,000 appraisal and a 75% loan to value the new loan is $150,000, with closing costs at 2% of it. That 75% is the example’s assumption, not a published limit.
| All cash | HELOC at 8.5% | Hard money at 10% | |
|---|---|---|---|
| Your own cash before the refinance | $160,600 | $9,992 | $30,907 |
| Refinance closing costs (2%) | $3,000 | $3,000 | $3,000 |
| Paying off the purchase loan | – | $155,000 | $137,000 |
| New loan at 75% of $200,000 | −$150,000 | −$150,000 | −$150,000 |
| Cash left in the house | $13,600 | $17,992 | $20,907 |
Paying cash needs $160,600 on day one and ends with $13,600 stuck in the house. The HELOC needs $9,992 and ends with $17,992 stuck in it. The $4,392 between those two endings is the HELOC interest, to the dollar.
The house rents for $2,400 and clears $283 a month after the new mortgage, vacancy, repairs, reserves and management, the same in all three columns, because all three end on the same $150,000 loan. Against the cash left in, that is 25.0% for the cash buyer, 18.9% on the HELOC and 16.3% on hard money. Borrowing the front end does not make the deal richer. It makes it smaller, and a smaller deal is what pays for the next one.
For the same house with no purchase loan, see the BRRRR worked from purchase to refinance. For the hard-money version, see the hard-money BRRRR post.
Can you refinance before you have owned it six months?
This is where a four-month BRRRR meets a rule.
Fannie Mae’s cash-out refinance section, dated 10 December 2025, says at least one borrower must have been on title to the subject property for at least six months before the new loan’s disbursement date. The example refinances at month four, so it needs an exception.
The one that fits is the Delayed Financing Exception. Its conditions include an arm’s-length purchase, a settlement statement confirming that no mortgage financing was used to obtain the property, and a title search confirming that there are no existing liens on it. The purchase funds must be documented, and the guide names a HELOC on another property as one such source. Where a loan secured by another asset funded the purchase, the refinance settlement statement must show all cash-out proceeds pay off or pay down that loan. The new loan cannot exceed the documented initial investment plus financed closing costs, prepaid fees and points.
Two of those conditions decide whether a HELOC fits. A line on the home you live in is a loan secured by another asset, which the guide contemplates. A line against the house you are BRRRRing is a lien on the subject property, and the exception wants that title search to come back with none. The 12-month wait that catches hard money is a separate rule about an existing first mortgage, covered in the BRRRR refinance waiting period post.
What happens to the HELOC when you refinance?
It depends which house the line is against.
If the line is on your own home, the refinance money lands in your account, and paying the line down is between you and your lender, unless the Delayed Financing Exception requires it. If the line is on the house being refinanced, it is a subordinate lien, and the same Fannie Mae section lists paying off any outstanding subordinate mortgage liens of any age among the acceptable uses of a cash-out refinance. The 12-month seasoning rule there is written for the first mortgage being paid off, not for subordinate liens.
Either way the line reopens as you pay it down, which is what makes a HELOC repeatable in a way a single loan is not.
What should you check before you draw on the line?
Four things, two of them about time rather than money.
- When the draw period ends. The CFPB says the borrowing period could last 10 years, for example. A rehab that runs long is survivable. A line that closes to new draws during your third BRRRR is not.
- What the repayment period asks for. The CFPB says the lender may set a schedule to repay the full balance, often over ten or 20 years. A balance you were paying interest on starts asking for principal too.
- How far the rate can move. It is usually variable, so price the four months at a rate above today’s and see what they cost.
- What the payment does to your next loan. A lender underwriting the refinance counts the HELOC payment as a debt. The HELOC down payment post works through what that does to a rental’s monthly numbers.
How do you run a HELOC BRRRR in the calculator?
Open the BRRRR calculator and set How are you buying it? to the financed option. That opens Loan amount, as a percent of price, plus Interest rate, Loan points and Rehab included in the loan?.
For the HELOC column: Loan amount 100%, Interest rate 8.5, Loan points 0, and Rehab included in the loan? on, which lends the full $35,000 on top of the price. Then put 11% in the interest rate box and see what it does to Cash left in the deal before you call the line cheap money.