Last updated: July 2025
Why homeowners use HELOCs to buy land or expand their property
As property values increase and homeowners look for creative ways to enhance their assets, more are turning to Home Equity Lines of Credit (HELOCs) to purchase additional land or expand their existing property.
Whether it’s buying an adjacent lot, building a detached studio, or adding a second story, leveraging your home equity can be a cost-effective way to unlock new value.
With traditional loans often requiring extensive paperwork and long approval times, a HELOC offers quick access to flexible funds, ideal for real estate projects where timing and agility matter.
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Tap into your home’s potential in minutes. Start our streamlined digital application to discover if a HELOC is right for you.
How a HELOC works for property-related purchases and improvements
A HELOC is a revolving line of credit secured by the equity in your home.
Once approved, you can draw funds as needed, pay interest only on the amount used, and reuse the line throughout the draw period.
Here’s how it works:
- Draw period: Typically 5–10 years, where you can borrow as needed
- Repayment period: Often 10–20 years to repay the balance with principal and interest
- Interest: Generally lower than credit cards or unsecured loans
HomeEQ’s streamlined digital platform allows qualified borrowers to get pre-approved within minutes and access funds in as little as 5–7 business days.
What types of expansions or land deals can be funded with a HELOC?
HELOCs are highly versatile.
Homeowners commonly use them to:
- Purchase adjacent or nearby lots to expand property boundaries
- Build Accessory Dwelling Units (ADUs) like guest houses, in-law suites, or rental spaces
- Add living space with a second story, room extension, or sunroom
- Convert garages or basements into livable areas
- Install major exterior features like pools, fencing, or driveways
Illustrative scenario
Derek and Lynn used a HELOC to buy the vacant lot behind their home, extending their backyard by 40%. They later built a detached studio that doubled as a home office and short-term rental unit, generating $1,200/month.
Whether you’re expanding for lifestyle reasons or to boost resale value, a HELOC gives you control over the timeline and budget.
Check out the HomeEQ HELOC Loan Calculator.
Benefits of using a HELOC vs other real estate financing options
When funding a land purchase or property expansion, you have options, but few are as flexible as a HELOC.
| Financing Option | Pros | Cons |
| HELOC | Low interest, flexible use, quick access | Secured by your home, variable rates |
| Cash-out refinance | Fixed rate, potentially higher loan amount | Longer process, restarts mortgage term |
| Personal loan | No collateral required | Higher interest, shorter repayment timeline |
| Construction loan | Tailored for major builds | More documentation, phased funding |
| Credit cards | Easy access | Very high interest, poor for large expenses |
A HELOC is particularly useful when your project is incremental or exploratory, such as buying land for future development or starting a multi-phase renovation.
Related Reading: What is a Home Equity Line of Credit?
How to qualify and apply for a HELOC with HomeEQ
HomeEQ offers a fully digital HELOC application that’s designed for speed and convenience. Here’s what you’ll typically need:
- A minimum credit score of 640
- At least 15% equity in your home
- Verifiable income to support repayment
- A primary residence in an eligible state
Steps to apply:
- Check your rate: Use HomeEQ’s prequalification tool (soft credit pull)
- Complete your application: Upload documents online (no branch visit required)
- Get approved in minutes: Qualified borrowers receive quick decisions
- Access funds: Funding typically happens in under a week
This simplified process allows homeowners to act quickly when opportunity strikes.
How to Apply for a HELOC Online.
Tips for managing costs and ROI during property upgrades
To ensure your land purchase or property expansion delivers value, consider the following best practices:
- Get multiple quotes from contractors or builders to benchmark costs
- Check zoning and permitting before committing funds
- Prioritize high-ROI projects (ADUs, kitchen expansions, added bathrooms)
- Track all expenses for potential resale or rental tax deductions
- Build in a buffer (10–20%) for unexpected costs
Illustrative scenario
Tasha used her HELOC to expand her two-bedroom home to three bedrooms, which increased her property value by $80,000. She also added a small detached office, which she rented to a remote worker for $750/month.
By thinking long-term, you can turn a strategic property improvement into an income-generating asset.
FAQ: HELOC for land or property expansion
Can I use a HELOC to buy raw land?
Yes, but check with your lender. Some restrict HELOC use for undeveloped land, especially if it’s not adjacent to your primary residence.
Will the improvements increase my home’s value?
Often, yes, especially for projects like ADUs, extra bedrooms, or enhanced outdoor space. Consult a real estate expert for projections.
Do I need a contractor to access funds?
No. With a HELOC, you control how and when funds are used. No need for lender approval of contractors.
What if I don’t use the full line of credit?
That’s fine. You only pay interest on the amount drawn, so unused funds cost nothing.
Can I use a HELOC to expand a rental property?
Most HELOCs are tied to your primary residence, but the funds can be used on any property you own, unless otherwise restricted.
Unlocking your property’s potential with a HomeEQ HELOC
Using a HELOC to purchase land or expand your property opens the door to personal and financial growth.
Whether you’re building a guest suite, buying the lot next door, or adding square footage, a HELOC can help you act on opportunities with speed and confidence.
Just remember: It’s your equity. Use it wisely, with a plan and a purpose.
Explore your options and discover how HomeEQ helps homeowners turn equity into opportunity, without red tape.
Check your HELOC rate in minutes and discover what land buying power your equity has in store.
