Can you get a HELOC on a below-market-rate or deed-restricted home?
On most below-market-rate homes the answer is no, and the restriction — not the lender — is what stops it. A recorded covenant runs with the property and limits what debt can be placed against it. Some cities prohibit a home equity line by name. Others cap total debt at a percentage of a restricted resale price, which on a home bought near that cap leaves nothing to draw. Every one of them requires the city’s written approval first.
These are the requirements for the home equity line we place. Other lenders set their own guidelines, and some are more flexible.
If you bought your home through a city affordable-housing program — below-market-rate, inclusionary, workforce, or with down-payment help from a city loan — there is a document recorded against your title that most owners have never read since closing. It controls what you may resell the home for, and it controls what you may borrow against it.
This matters because the usual order of operations wastes your money. People apply, pay for a valuation, and only then learn the covenant blocks the loan. Checking takes one phone call to the city and costs nothing.
Why a deed restriction blocks what equity alone would allow
On an unrestricted home, the question is market value minus what you owe. On a deed-restricted home there are two values: what the home would sell for on the open market, and the restricted price the covenant lets you sell it for. Your borrowing is measured against the restricted figure, which is usually far lower.
That gap is the whole problem. A home worth $900,000 on the open market with a Maximum Sales Price of $420,000 may have no borrowable equity at all under its covenant, no matter what a valuation says.
San Francisco: a HELOC is not allowed
The Mayor’s Office of Housing and Community Development states it plainly: “MOHCD does not allow Home Equity Line of Credit (HELOC).” The stated reason is that a line of credit typically carries a variable rate, and variable rates are prohibited under its rules.
A fixed-rate home equity loan may be approved, but only in defined circumstances: capital improvements, educational expenses, medical costs, or a settlement on dissolution of a marriage or domestic partnership. Approval must come before you apply, post-purchase counseling through a HUD-approved agency is required, and the rules state that “under no circumstances can the new loan amount exceed the original loan amount.”
If your home carries a City cash loan — DALP, City Second, PIC, TND or Rehab — withdrawing equity is prohibited outright, and a request is typically denied or conditioned on repaying the City loan in full. On a plain refinance you may take up to 3% of the new first mortgage as cash to cover customary closing costs, and nothing beyond that. Lenders must appear on MOHCD’s Authorized Lender List.
Source: SF.gov, Refinancing and Subordination. Checked October 2026.
Pleasanton: 90% of the Maximum Sales Price, counted at full draw
Pleasanton’s restrictive covenants name equity lines directly. Junior loans and equity lines are “not permitted, except as expressly approved by the City in writing,” and the City will approve one only if total debt against the property stays at or below 90% of the Maximum Sales Price.
One detail decides most of these cases: the covenant says that total is “calculated assuming a maximum permitted draw on any equity line of credit.” Your full line counts against the cap from day one, even if you never draw a dollar. The City will also not approve any loan or line that includes negative amortization.
Source: City of Pleasanton, sample PHAP restrictive covenants, Sections 5 and 9. Checked October 2026.
Hayward: approval at the City’s discretion
Hayward does not publish a rule naming home equity lines. What it publishes are two conditions that a refinance must meet: the new loan may not exceed the original principal amount from when you bought the home, and it may not push your monthly payment on all debt recorded against the home above the City’s calculated Affordable Cost.
A new loan capped at your original principal leaves no room for equity withdrawal. Hayward states that approval is at the discretion of the City and points owners to their individual Buyer’s Occupancy and Resale Restriction Agreement, so your own recorded document governs.
Source: City of Hayward, Refinancing a BMR unit. Checked October 2026.
Other programs in our service area
Similar programs run in Morgan Hill, Sunnyvale, Mountain View, Milpitas, Santa Clara, Dublin, Marin County and Irvine, and each sets its own terms. The pattern repeats: written approval before you apply, a cap tied to a restricted price rather than market value, and a prohibition on negative amortization.
Don’t assume your city matches a neighboring one. The recorded covenant on your property is the only document that governs your home.
How to find out in a single afternoon
- Pull your recorded covenant. It was recorded at close of escrow and appears in your title report under a name like “Resale Restriction Agreement,” “Restrictive Covenants” or “Regulatory Agreement.” Your county recorder has a copy.
- Read the refinancing section. Look for the words “equity line,” “junior,” “encumber” and any percentage figure. That paragraph is the answer.
- Call the city’s housing division before paying for anything. Ask what the current Maximum Sales Price or Affordable Cost is for your unit, and what their approval process takes.
If the covenant allows a loan with city approval, we can tell you quickly whether the home equity line we place fits the terms your city will approve — including the fixed-rate and no-negative-amortization conditions several of them impose.
Think this applies to your property?
Send the details. Matt reviews them and replies himself, even when the answer is no.
Deed-Restricted and BMR Homes: questions
Usually not. San Francisco’s MOHCD prohibits a home equity line of credit outright. Pleasanton permits one only with written City approval and only if total debt stays at or below 90% of the Maximum Sales Price, counting the full line as drawn. Hayward caps a new loan at your original principal amount, which leaves no room to withdraw equity. Your recorded covenant governs, so read it before you apply anywhere.
Because two different values apply. Market value is what the home would sell for without the restriction; the Maximum Sales Price is what the covenant permits you to sell it for. Borrowing limits are measured against the restricted figure, so a home with substantial market equity can have no borrowable equity under its covenant.
In San Francisco, no. Properties carrying a City cash loan — DALP, City Second, PIC, TND or Rehab — cannot withdraw equity, and the City typically denies the request or requires the loan to be repaid in full. On a straight refinance you may take up to 3% of the new first mortgage to cover customary closing costs.
In Pleasanton, yes. The covenant calculates total debt “assuming a maximum permitted draw on any equity line of credit,” so the entire line counts from the day it is recorded even if the balance stays at zero. Other cities word this differently, which is why the recorded document matters more than the general rule.
These are the requirements for the home equity line we place. Other lenders set their own guidelines, and some are more flexible.
The other main requirements
Credit Score Requirements
On the line we place, 640 is the minimum for a home you live in. Second homes and investment properties need 680, and th…
Learn moreDebt-to-Income Requirements
On the line we place, debt-to-income can be up to 50% of your gross monthly income. Over that, you’re not automatically …
Learn moreEligible Property Types
On the line we place, the home must be an eligible property type — single-family residence, townhome, planned unit devel…
Learn moreFind out where you stand before you apply
Credit, income, property and title each have their own rule. Most declines trace back to one of them, and many can be fixed before you apply.