Last updated: July 2025
Why homeowners are using HELOCs to start Airbnb rentals
Short-term rentals have exploded in popularity, with homeowners across the country transforming spare rooms, basements, ADUs, and second homes into income-generating Airbnb properties.
For many, the potential to earn hundreds or even thousands of dollars per month is too good to ignore.
But creating a rental-ready space comes with startup costs. Whether it’s remodeling a bathroom, furnishing a guest suite, or upgrading HVAC systems, these expenses can quickly add up.
Instead of draining savings or taking on high-interest credit card debt, many homeowners are using a Home Equity Line of Credit (HELOC) to fund the transformation.
A HELOC offers a flexible, low-interest way to tap into your home’s equity and reinvest it into a profitable rental space.
Start an application with HomeEQ. Our ten-minute assessment could tell you how much home equity potential you have.
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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 renovations or upgrades
Having a HELOC means you have access to a revolving line of credit secured by your home equity. It allows you to borrow funds as needed, drawn over time, not all at once, and only pay interest on the amount you use.
This makes it ideal for Airbnb conversions, where renovation timelines and costs can be unpredictable. Unlike traditional renovation loans, a HELOC provides ongoing access to capital as projects evolve.
HomeEQ’s digital application process allows qualified homeowners to:
- Prequalify online with a soft credit pull
- Get approved in minutes
- Access funds in as few as 5–7 business days
Most draw periods typically last 5 to 10 years, giving you ample time to use funds as needed while planning your repayment.
What is a Home Equity Line of Credit?
What types of Airbnb improvements can a HELOC fund?
Because HELOCs are flexible, you can use them for a wide range of upgrades to make your property guest-ready. These may include:
- Interior renovations: Kitchenettes, private bathrooms, updated flooring, soundproofing
- Furnishings and décor: Beds, seating, linens, smart locks, TVs
- Guest amenities: Mini-fridges, coffee stations, Wi-Fi routers
- Exterior upgrades: Landscaping, patios, fire pits, separate entrances
- Safety and compliance: Smoke detectors, egress windows, insurance improvements
Illustrative scenario: Tina and Eli used a HELOC to finish their basement into a private Airbnb suite. Their $25,000 renovation included a bathroom remodel, furniture, and a side entrance. Within six months, they were earning $1,800/month in bookings.
How to Apply for a HELOC Online
Pros and cons of using home equity to fund a short-term rental
Like any financing tool, using a HELOC for Airbnb renovations comes with trade-offs.
| Pros | Cons |
| Low interest rates vs. credit cards | Variable rates may increase over time |
| Flexible draw structure | Secured by your home, risk if payments lapse |
| Interest-only payments during draw period | Not all improvements yield high returns |
| Potential to earn monthly rental income | Local zoning or HOA restrictions may apply |
The key is understanding both the financial opportunity and the responsibility that comes with tapping your home equity.
How to qualify for a HELOC with HomeEQ
HomeEQ’s platform makes it easier than ever to apply for and receive HELOC funding. Here’s what you’ll need to get started:
- A credit score of 640 or higher
- At least 15% equity in your home
- A primary residence in an eligible state
- Verifiable income to support repayment
The application is entirely online, and checking your rate has no impact on your credit score. Once approved, funds are deposited directly into your account, ready to be used for any qualifying upgrade or expense.
Tips for maximizing your Airbnb return on investment
Turning your property into a successful Airbnb isn’t just about upgrades; it’s about smart planning. Here are some best practices:
- Start with a budget: Use a HELOC calculator to set a cap for your project
- Know your market: Research nightly rates, occupancy trends, and local competition
- Invest in what matters: Cleanliness, safety, and comfort are top guest priorities
- Design for longevity: Choose durable furnishings and finishes to reduce replacement costs
- Track expenses: Document your renovation costs for potential tax benefits (consult a CPA)
The most successful Airbnb hosts treat their space like a business, and the HELOC as smart startup capital.
FAQ: HELOC for Airbnb conversions
Can I use a HELOC to furnish my Airbnb?
Yes. You can use HELOC funds for any personal expense, including furnishings and guest amenities.
Are the interest payments tax-deductible?
If the Airbnb is considered an income-generating rental, some expenses may be deductible. Consult a tax professional.
Do I need to use the full HELOC at once?
No. You draw funds as needed and pay interest only on the drawn amount.
Can I open a HELOC on a rental property?
Most HELOCs are for primary residences. However, you can use funds from a HELOC on your primary home to upgrade a second property.
What if local laws limit short-term rentals?
Always check local zoning and HOA rules before starting an Airbnb project. Compliance is key.
The key to opening your short-term rental could be in home equity
An Airbnb conversion can turn your home into a powerful income asset.
With a HELOC from HomeEQ, you can fund the transformation on your terms, securely and efficiently.
Explore your options and discover how home equity can help you launch your next rental venture.
Check your HELOC rate in minutes, and see what your home equity potential could be.
