Hard Money vs HELOC for Funding Your Next Hawaiʻi Investment
A home equity line of credit taps your primary residence to fund investments. It is cheap but slow to set up, limited in size and puts your home at risk. A hard money loan is secured by the investment property itself.
Many Hawaiʻi investors use a HELOC for the down payment and hard money for the balance and the rehab.
| Factor | Hard Money | HELOC |
|---|---|---|
| Collateral | The investment property | Your primary residence |
| Setup time | Days | 4 to 8 weeks |
| Rate | About 12% per year (1% per month) | Prime plus a margin |
| Amount | Sized to the deal | Capped by home equity and income |
| Income docs | None | Full documentation |
| Risk to your home | None | Direct |
Choose hard money when
- You do not want to risk your primary home
- The deal is larger than your HELOC limit
- You need rehab draws
- You need to close fast
Choose heloc when
- You already have a HELOC in place
- You only need a small amount
- Lowest cost matters more than speed
Our verdict
A HELOC is a good source of equity for down payments. Hard money is the right tool for the acquisition and renovation itself.