Revocable vs. irrevocable, from a lender's point of view
A revocable trust can be changed or undone by the person who made it. That is exactly why a lender is comfortable: the settlor is still, in substance, the owner, and the guidelines most lenders use require the settlor to be a trustee (or to have an institutional trustee), to occupy a primary residence, and to sign as borrower.
An irrevocable trust is built to do the opposite — to move the home out of the settlor's control, often for asset protection, long-term-care planning or tax reasons. The trustee may be someone else; the settlor may be barred from receiving the property back; borrowing against the house may be restricted or may defeat the purpose of the trust. A lender looking for an owner-occupant with power to pledge the home rarely finds one.
Land trusts
A land trust (common in Florida and Illinois) holds title through a trustee — often a title company or attorney — while the beneficiary keeps the right to use and control the property. It is a privacy and convenience tool, and many home equity programs list land trusts as ineligible outright. If your home is in a land trust, expect to discuss title with your attorney before any home equity loan.
LLCs and other entities
A primary residence held by an LLC is outside what home equity programs lend on; they lend to people living in homes they own. A rental held in an LLC is a separate question with its own options, covered on our rental site.
Questions for your attorney before you try
- Is my trust revocable or irrevocable — and if it was revocable, did it become irrevocable when a settlor died?
- Does the trust allow the trustee to borrow against the home, and would doing so conflict with why the trust was created?
- Would changing how the home is titled affect Medicaid planning, creditor protection or taxes in my state?
If the answers point to a revocable trust with borrowing power, the line is usually straightforward. If they point to an irrevocable trust, the realistic options are narrower and the conversation starts with your attorney rather than a lender.
- Fannie Mae Selling Guide B2-2-05, Inter Vivos Revocable Trusts — trust established by natural persons, a settlor among the trustees with power to mortgage, settlor occupancy and signature on a principal residence, title insured without trust-related exceptions
Questions trust owners ask about this
Can an irrevocable trust get a HELOC?
Rarely on a standard home equity program. The settlor usually no longer controls the home, which is what these programs require. Some specialty loans exist, but discuss them with your attorney first.
Does a revocable trust become irrevocable when someone dies?
Commonly, yes — at the death of the settlor (or the second settlor of a joint trust), most revocable trusts become irrevocable. That changes what borrowing is possible; see the successor-trustee page.
Can I get a HELOC if my home is in a land trust?
Many programs list land trusts as ineligible. Talk to your attorney about title before applying.
Keep reading
- How a HELOC on a trust-owned home worksWho signs, what the lender reviews, and why the trust can stay exactly as it is.
- Successor trustees and heirsWhat changes when the person who made the trust dies or cannot act.
- Why banks decline trust-owned homesIt is a staffing and title-insurance decision, not a verdict on you.
- For estate-planning attorneysHow we work with your client's trust, and what we will never ask them to do.