What is a Real Estate Line of Credit?

A real estate line of credit is a specific financial tool set up similarly to a credit card but with much more competitive rates. You get approved for a certain amount of money and you can withdraw from that money during what are called ‘draw periods.’ You then pay back interest on the money you use. You must meet minimum monthly payments and you must pay off the entire loan during its term. The line of credit is often used by investors to both purchase new properties and renovate existing real estate. 

Can You Get a Business Loan for Real Estate Investing?

There are many different types of business loans that can be used for real estate investing. You may already have a portfolio of real estate and you can get a business loan based on your established business or on the values of your properties. Additionally, a new business may be able to get a loan to invest in their first property or to fix up an existing property. 

Can You Purchase Property With a Line of Credit?

Yes, you can purchase property with a line of credit, as long as that is not one of the restricted uses. You can either use the line of credit to purchase the property outright or you may be able to use the line of credit as a down payment for a loan on the property; if the lender allows that. 

What Credit Score Do You Need for a Business Line of Credit?

Minimum credit score requirements vary by the type of financial product as well as by the lender offering it. However, a minimum credit score in the 600s is usually required to qualify for a business line of credit. Typically, the higher your credit score, the more options you will have to choose from and the better interest rates and terms you will be offered. 

About the Author

Allison Bethell

Allison Bethell

Real Estate and Finance Expert

Allison Bethell is a content writer, real estate investor, small business owner, and consultant. She has a B.A. from Villanova University in Sociology and Business. She also holds several graduate certificates in early childhood development, screenwriting, and contract law.

More about me

Related Articles

Show More