Can you get a HELOC on an inherited home?

Yes, once the house is in your name. Until then, the estate or the trust owns it, and lenders lend only to owners on title. Here's how heirs get from inheritance to a line of credit.

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Step one: get title into your name

• Through probate: the court-appointed executor deeds the house to the heirs when the estate is settled. Probate can take months to more than a year.
• Through a living trust: the successor trustee distributes the house by deed under the trust's terms, usually much faster.
• Through a transfer-on-death deed: recorded paperwork, often an affidavit with the death certificate, moves title to the named beneficiary.
• Joint tenancy with right of survivorship: the surviving owner records the death certificate and owns the home outright.

If several siblings inherit together, all of them are on title, and a lender will want every owner to sign, or will lend only after the others are bought out.

The existing mortgage can stay

Federal law (the Garn-St Germain Act) stops lenders from calling a loan due because a home passed to a relative after the borrower's death. Heirs can keep the original mortgage, often at a low rate, and add a HELOC behind it instead of refinancing. The servicer must also work with a "successor in interest," so ask them to confirm you in that role and send statements in your name.

What heirs use the line for

• Buying out siblings. One heir keeps the house and pays the others their share. See buying out a co-owner.
• Repairs before selling or moving in. Older inherited homes often need roofs, systems and cosmetic work to sell well.
• Estate costs. Taxes, legal fees or a final medical bill, so the house isn't sold in a hurry.
• Making it a rental. Funding the work to rent it out, with the property's future rent in mind.

Does living in an inherited home change the HELOC terms?

Yes. A lender prices an inherited home you'll live in as a primary residence. If it becomes a second home or rental, the line is priced as one, with lower limits, and fewer lenders offer HELOCs on rentals. See HELOCs on investment property.

Property taxes in California and Florida

• California: since Proposition 19 (2021), a parent-to-child transfer keeps the parent's low assessed value only if the child makes it their primary residence within a year, and only up to a value cap; otherwise the home is reassessed at market value, which can raise taxes sharply.
• Florida: the homestead exemption and Save Our Homes cap don't transfer automatically. Heirs who move in and apply get their own homestead exemption, but the assessed value generally resets.

A HELOC itself never triggers reassessment, but a higher tax bill counts in your monthly costs when a lender figures your debt-to-income ratio.

Example

Two sisters inherit their parents' home through a living trust. It's worth $700,000 with $120,000 left on a 3% mortgage. One sister wants to keep it. After the trustee deeds it to her, she opens a HELOC and draws $290,000 to pay her sister half the equity. The 3% mortgage stays in place, and her combined loan-to-value is 59%.

Also asked

Can the estate or executor take out a HELOC?

Rarely. HELOCs are made to individual owners, so an estate or executor usually can't take one out. An estate that needs cash before distribution usually uses an estate or probate loan, which costs more.

Do I need to own an inherited home for a while before getting a HELOC?

Usually not. Many HELOC lenders exempt inherited homes from ownership waiting periods, so you can apply once the house is in your name. Check the specific program.

What if an inherited home has a reverse mortgage?

The reverse mortgage must be repaid, usually within six months to a year, by selling or refinancing. A HELOC alone may not be enough; a refinance is often the tool. See reverse mortgages.

More in HELOC guides

• HELOC with bad credit
• HELOC on a paid-off house
• HELOC if you're self-employed
• HELOC on an investment property
• HELOC on a second home
• HELOC after bankruptcy
• Using a HELOC in a divorce
• HELOC for retirees

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