Using a First Lien HELOC to Purchase a New Home

Can You Buy a Home with a First Lien HELOC?

Yes. A first lien HELOC can serve as your primary purchase loan. Instead of a 30-year mortgage, you finance the purchase with a revolving line of credit in the first lien position. From day one, your income deposits directly reduce principal — there's no waiting for a refinance window to switch to the velocity banking strategy.

Why This Makes Sense for Buyers

For a buyer purchasing a $400,000 home with 20% down, the $320,000 HELOC at 7.5% with $2,500/month surplus could be paid off in approximately 7 years, with total interest around $90,000. The same purchase on a 30-year mortgage at 7% would cost over $446,000 in total interest and take three decades to pay off. The savings: over $350,000 and 23 years of debt.

The advantage of using a HELOC for purchase (vs. getting a mortgage and then refinancing to a HELOC later) is that you avoid the closing costs of two transactions and start velocity banking from day one — capturing every dollar of surplus from your very first paycheck after moving in.

Requirements for a Purchase HELOC

Requirements are typically stricter than for a refinance HELOC. Expect to need a strong credit score (usually 700+), at least 20% down payment, stable and verifiable income with low debt-to-income ratio, and a property that meets the lender's appraisal requirements. Not all first lien HELOC providers support purchase transactions, so confirm this capability during the lender matching process.

Important Considerations

When buying a new home, closing costs, moving expenses, and furnishing can create temporary negative cash flow. Plan for these expenses in advance and avoid drawing from the HELOC for non-essential purchases during the first 6 months. Build a buffer before closing.

FirstLienHELOC.com is an educational platform. We are not a licensed lender. Results vary based on individual financial circumstances.