Last updated: December 2025
Quick answer
Yes, you can use a HELOC for home renovations before selling your house. A HELOC gives you access to your home’s equity, allowing you to fund upgrades that can improve resale value, provided you qualify, and the property meets the lender’s requirements.
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Why homeowners use a HELOC to renovate before selling
A home equity line of credit (HELOC) can be a strategic financing tool if you’re preparing to sell your house.
Instead of paying for updates out of pocket, a HELOC allows you to borrow against your home’s equity, complete renovations, and potentially sell the property at a higher price.
Many sellers use HELOC funds to cover:
- Kitchen and bathroom remodels
- Flooring and paint updates
- Roof, HVAC, or plumbing repairs
- Landscaping and curb appeal improvements
- Pre-sale staging or inspection fixes
These upgrades often help your home stand out in a competitive real estate market and justify a higher asking price.
How a HELOC works when preparing to sell
A HELOC functions as a revolving line of credit. You only borrow what you need, and interest typically accrues only on the drawn balance. Most HELOCs offer:
- A draw period of 5–10 years with interest-only payments
- A repayment period of 10–20 years with full principal and interest payments
- Variable interest rates (though some offer fixed-rate options)
When using a HELOC before selling, most homeowners repay the balance in full at closing with proceeds from the home sale.
Key considerations before using a HELOC for pre-sale renovations
Before tapping into your equity, review these important factors:
- Timing: Some lenders require a minimum time between opening a HELOC and paying it off. Selling too soon could trigger early repayment penalties or fees.
- Loan-to-value (LTV) ratio: Most lenders allow borrowing up to 85% of your home’s value, minus any existing mortgage balance.
- Closing delays: If your HELOC isn’t fully drawn or repaid at closing, coordinate with your real estate agent and title company.
- Repayment: If your home doesn’t sell quickly, you’re still responsible for monthly HELOC payments.
Which renovations offer the best ROI before a sale?
Not all upgrades deliver equal value. Use your HELOC strategically by focusing on high-return improvements. According to recent market data, the most cost-effective upgrades include:
| Renovation | Average ROI (%) |
|---|---|
| Minor kitchen remodel | 71% |
| Bathroom update | 67% |
| New garage door | 93% |
| Fresh paint (neutral colors) | 60–80% |
| Landscaping enhancements | 70% |
Avoid over-investing in niche or luxury renovations that don’t align with your market or target buyer.
HELOC vs home equity loan before selling
Both HELOCs and home equity loans allow you to tap equity, but they function differently:
| Feature | HELOC | Home equity loan |
|---|---|---|
| Loan type | Revolving line of credit | Lump-sum installment loan |
| Repayment | Interest-only during draw period | Fixed monthly payments |
| Flexibility | Borrow as needed | Full amount disbursed upfront |
| Best for | Ongoing or phased renovation costs | One-time large expenses |
If you’re unsure how much you’ll spend on updates, a HELOC offers more flexibility.
Should you use a HELOC or sell as-is?
Selling a home as-is may be faster, but it often means accepting a lower offer. Use the following decision points to help choose your approach:
Use a HELOC to renovate before selling if:
- Your home needs repairs that buyers would consider “deal-breakers.”
- You can increase resale value beyond the cost of the renovation
- You want to attract more competitive offers
Sell as-is if:
- The renovation costs are too high relative to your equity
- You need to sell quickly and avoid additional debt
- The buyer pool in your area prefers fixer-uppers
Pros and cons of using a HELOC before listing
Pros:
- Improves resale value and marketability
- Funds can be used for a wide range of improvements
- Interest may be tax-deductible (if used to improve the home)
- Pay off the balance at closing
Cons:
- Adds debt before the home is sold
- Monthly payments begin immediately
- Variable interest rates can fluctuate
- May complicate the closing process if not disclosed properly
Tax implications of renovation-related HELOC use
According to IRS guidelines, HELOC interest may be tax-deductible if the funds are used to “buy, build, or substantially improve” the property securing the loan. However:
- The deduction applies only to the property used as collateral
- You must itemize deductions to claim it
- Interest used for other purposes (e.g., paying off credit cards) is not deductible
Consult a tax professional to confirm eligibility.
Timeline and selling strategy
If you plan to use a HELOC before selling, consider this timeline:
- 3–6 months before listing: Open the HELOC and complete initial inspections
- 2–4 months before listing: Begin renovations with contractor estimates in hand
- 1 month before listing: Complete cosmetic updates, staging, and deep cleaning
- List your home: Coordinate with your real estate agent for market timing
- Sell and repay HELOC: Use closing proceeds to pay off the balance
Check your HELOC rate in minutes.
Use our HELOC calculator to estimate renovation financing
Before you apply, use a HELOC calculator to estimate:
- Your maximum line of credit based on your home’s equity
- Monthly payments based on your draw amount
- How repayment affects your budget if the home doesn’t sell right away
Estimate your renovation budget with our HELOC calculator and see how your equity could increase your sale price.
HomeEQ can help make renovations pay off when selling
Using a HELOC to fund pre‑sale renovations can help you maximize your home’s resale value without refinancing your mortgage.
With careful planning, smart renovation choices, and coordination with your real estate agent, you can turn equity into competitive offers and higher sales proceeds.
Before you proceed, understand your timeline, lender terms, and repayment expectations so you’re positioned for success. Estimate your HELOC rate in minutes.
Frequently asked questions: HELOC for home renovations before selling
Q: Can I sell my home right after getting a HELOC?
A: Yes, but some lenders may have restrictions or early closure fees. Review your HELOC terms carefully before listing the home.
Q: Do I need to pay off the HELOC before closing?
A: No, but the balance must be settled during the sale closing process, usually from sale proceeds held in escrow.
Q: Will a HELOC delay my home sale?
A: It can, if not coordinated properly. Inform your real estate agent and escrow company about the HELOC so it’s included in the closing paperwork.
Q: Can I use a HELOC on a second home or investment property before selling?
A: Some lenders allow HELOCs on non-primary residences, but terms are often stricter, and maximum loan-to-value ratios may be lower.
Q: What happens if my home sells for less than expected?
A: You’re still responsible for repaying the HELOC in full. If sale proceeds don’t cover it, you’ll need to pay the remaining balance out of pocket.
