Can you have multiple HELOCs at the same time?

A home equity line of credit (HELOC) could help you manage your financial needs  or just get cash in an emergency when you need it. What if you want to take out more of your equity? Can you get a second HELOC if you already have one?

Yes, it's technically possible to have multiple HELOCs, though it isn't common. Most people replace their existing HELOC with a new one instead of taking out a second home equity line of credit. 

Here’s how having multiple HELOCs works, and what to know before you borrow. 

What it means to have multiple HELOCs

Having multiple HELOCs can mean one of two things: you have more than one home equity line of credit spread across different properties, or you have multiple HELOCs on the same property. Either situation is possible, but they can affect you financially in different ways. 

Let's backtrack for a minute. How does a HELOC work? In simple terms, it's a second mortgage that's secured by your home. HELOCs allow you to turn your home equity into cash you can spend. Equity is the difference between what you owe on the property and its market value. 

To have multiple HELOCs means you owe multiple mortgage payments on top of what you pay to the mortgage used to buy the home. You might have multiple HELOCs on different properties if you own a home that you live in, along with one or more investment properties. Or you could get more than one HELOC on your primary residence. 

Can you have multiple HELOCs at the same time?

You could have multiple HELOCs at the same time. Again, this isn’t a common scenario. Whether you can have more than one HELOC at once hinges on your ability to qualify for multiple lines of credit, either for the same home or multiple homes. 

Every lender's policy is different, but generally, they use a combination of factors to decide whether to approve someone for a HELOC. Those factors include:

• Your credit scores

• Income

• Debt-to-income ratio (DTI) 

• Combined loan-to-value ratio

Multiple HELOCs on different properties vs. the same property

It doesn’t matter if you want to get multiple HELOCs on different properties or the same property. The lender will evaluate your ability to manage the debt in either case. However, there may be some differences in the criteria the lender uses and the minimum requirements you need to meet to be approved. 

If the HELOCs are on different properties

When you own multiple homes, you could technically apply for a HELOC on each one. The lender would still consider credit, income, and debt but they may take a closer look at the details of each home to gauge your ability to manage multiple HELOCs. Specifically, the lender may consider:

• Each home's estimated market value

• Current balances for any primary mortgages you owe to each property

• Estimated HELOC payments for each property

• Your current monthly obligations, including debt and other expenses

The lender may also ask about each property's use. For example, if you want a HELOC on an investment property, the lender may ask questions about how much rental income the property generates and the tenancy rate. 

If you want more than one HELOC on the same property

Having more than one HELOC on the same property, also called stacking, is possible if you can find a lender who's willing to approve you. It's not a common practice because of the risk it poses for the lender and for you, the borrower. 

For the lender, there may be concerns about what could happen to the HELOC if you can't repay what you owe. HELOCs create a lien on your home, which gives the lender a legal claim to the property. If you default on your HELOC, the lender could technically foreclose on the home to recover what's owed.

HELOCs are a second lien, which means they take a backseat to your primary mortgage for repayment. If you have a primary mortgage and a HELOC, any new HELOCs would be even further back in line. HELOCs are already riskier for the lender, and multiple lines of credit add to that risk. 

The risk for you is that if you can't pay any of the HELOCs you have, you could lose the home to foreclosure. Before you consider this route to raise cash for home improvements, debt consolidation, or any other purpose, review your budget and income to determine whether you could realistically handle another debt payment. 

What lenders may review before approving additional home equity borrowing

Lenders typically look at your financial details, including information about your home, to decide whether to approve you for multiple HELOCs. At the top of the list are the factors mentioned earlier: your DTI ratio, combined loan-to-value (CLTV), credit and income. Your current HELOC status could also come into play for final approval.  

Here's a quick explainer of each one:

• DTI. Your DTI measures how much of your gross pay goes to debt repayment each month. You can calculate DTI by adding up all your monthly debt payments, dividing by your gross income and multiplying that number by 100.

• CLTV. CLTV measures how much you owe on your home across all loans, including your primary mortgage and HELOCs, compared to the home's value. To find your CLTV, you'd add up all your first and second lien balances, then divide by your home's appraised value. 

• Credit scores and income. Lenders have varying requirements for minimum credit score and income for a HELOC. Generally, lenders want to know you have a steady history of on-time debt payments and reliable income. 

If you already have a HELOC, your lender may ask about its status. For example, they may ask how much you owe and whether your HELOC is in the draw period or the repayment phase. 

HELOCs typically feature a draw period followed by a repayment phase; these timeframes vary by lender and product. You might make interest-only payments in this period. In the repayment phase, you pay back the principal amount you borrowed, plus interest. Monthly payments are typically higher in this phase, and a lender might consider how that could impact your DTI later on if you're still in the draw period. 

Options to consider before applying for another HELOC

Should you get a HELOC if you already have one? Getting more than one HELOC at a time is possible, though not necessarily easy. There may be simpler options that could help you unlock more cash without having to get a second (or third) home equity line of credit. 

Ask for a higher HELOC limit

If your current HELOC is in good standing, you could ask the lender to raise your limit. For example, if you have a $50,000 HELOC you might ask the lender to bump that up to $60,000. 

You'll need to reach out to the lender to request a credit limit increase, and you may need a new appraisal to estimate your home's value. The lender may be able to offer a remote or virtual valuation instead of an in-person visit from an appraiser. 

Your lender may also ask for an updated income review, which you can prepare for by organizing key documents. Those include recent pay stubs, bank statements, and tax returns. If you're self-employed, your lender may ask for an up-to-date profit and loss statement and cash flow statement. 

Replace or refinance your current HELOC

A second option is to replace your current HELOC with a new one. You can refinance into a new loan for a larger amount to access more of your equity. Refinancing a HELOC could make sense if you want to:

• Increase your HELOC limit

• Change your draw period, repayment term, or interest rate

• Move from a variable-rate HELOC to a fixed-rate loan, or vice versa

Your new monthly payment may be higher if you borrow more money. You may want to run the numbers to make sure your budget can handle the new amount. 

Compare a HELOC and a home equity loan

You might decide to get a home equity loan instead of a HELOC to access more of your home's value. What's the difference between a HELOC vs. home equity loan? Both let you access your equity using your home as collateral, but their structure and terms are different.

With a HELOC, you have access to a revolving credit line that you draw against. You may be required to take a full or partial draw initially. Interest-only payments may be required in the draw period. HELOC rates may be fixed or variable. 

A home equity loan lets you borrow a lump sum that you repay over time, typically at a fixed interest rate. There’s no draw period, since you get all the money upfront, and repayment may last 20 to 30 years. Both HELOCs and home equity loans have closing costs, which you may be able to roll into your line of credit or loan. 

What are the approval requirements for a home equity loan? You'll generally need:

• Good credit

• Steady income 

• DTI that's within the lender's acceptable range 

• Sufficient equity in your home

Risks and tradeoffs to understand

Having multiple HELOCs on the same property or different ones has benefits and risks. You'll have more access to cash, but you'll also have more than one mortgage payment to manage. That could put a strain on your budget if your income changes. You may find it harder to juggle multiple HELOC payments. 

Your home secures every HELOC you have, so you have to think ahead and imagine how things might go if you fall behind on payments because of a financial hardship. Foreclosure is a real risk, so reviewing your budget and savings carefully before you borrow could give you a better idea of what's realistic and sustainable. 

A variable-rate HELOC could offer lower rates initially, but the rate may increase over time. If the rate goes up, your payments can also rise. You could eliminate that risk by choosing a fixed-rate HELOC instead. With a fixed-rate home equity line of credit, your rate and payment stay the same, so there are no unwanted financial surprises. 

Steps to take before you apply

Before you apply for multiple HELOCs, take time to map out a strategy. This checklist could help you prepare as you shop for a lender to work with. 

1. Clarify your financial goal. Think about why you want multiple HELOCs. For example, if you want ongoing access to a flexible line of credit, a HELOC could make sense. On the other hand, if you know you need a set amount you might choose a home equity loan instead.   

2. Estimate how much equity you want to keep and your CLTV range. Calculate how much equity you have in your home and what your CLTV might be if you were to get a HELOC. Figure out the maximum amount you could borrow to maintain a minimum desired amount of equity in the home. 

3. Call your current HELOC lender. If you have a HELOC already, talk to your lender about a potential credit limit increase. They may be able to offer you a higher HELOC limit in exchange for an updated appraisal, income verification and a credit check. 

4. Compare at least one alternative. Run the numbers on how much you could borrow with a home equity loan and what you might pay for it. Do the same for a HELOC refinance to find out if it might be cheaper to replace your existing line of credit instead of getting a new one.  

5. Stress-test the budget. Here's a simple way to figure out if having multiple HELOCs is doable. Estimate the payment for an additional HELOC and add that amount into your budget. If you don't need to apply for a home equity line of credit right away, try living on that new, higher budget for a month or two to get a sense of how comfortable it feels.