One option that can be overlooked is a Home Equity Line of Credit (HELOC).
What Is a HELOC?
A HELOC is a revolving line of credit secured by the equity in your home. Think of it like a financial safety net you can draw on when needed:
- Draw period (usually the first 10 years): You can borrow, repay, and borrow again as needed. Payments may cover just interest or both principal and interest.
- Repayment period (10-20 years): After the draw phase ends, you begin repaying principal and interest on the remaining balance.
- Rates: Since the loan is secured by your home, HELOC rates are often more favorable than many other financing options. Many are variable, so rate changes over time should be part of your planning.
Why a HELOC Might Make Sense
#1 Access to Cash Without Disrupting Investments
Medical careers don’t follow neat timelines. Unexpected expenses—like a home repair, relocation, or even an investment opportunity—can arise. Selling long-term investments to cover those needs could trigger taxes or force you to sell in a down market. A HELOC provides liquidity while keeping your investment strategy intact.
#2 Refinancing Certain Types of Debt
Some physicians use a HELOC to refinance higher-cost loans. Depending on your credit profile and home equity, this may reduce overall interest expenses and simplify repayment.
#3 An Affordable Way to Finance Larger Needs
For projects like home renovations or major professional expenses, a HELOC can provide an ongoing source of funds at competitive rates. The revolving structure means you can borrow in stages, which works well for expenses that don’t come all at once.
#4 Flexibility in Use
Unlike a traditional home equity loan that provides a lump sum, a HELOC lets you borrow only what you need and when you need it (though there may be a minimum draw amount). This makes it practical for phased expenses or simply having funds available as a backup.
#5 Potential Tax Benefits
If HELOC funds are used to buy, build, or significantly improve your home, the interest may be tax-deductible. As with all tax matters, it’s wise to confirm with your advisor.
More information here:
Can You Get a HELOC on an Investment Property?
How to Leverage Debt: The Best Ways to Use Debt to Your Advantage
Common Ways Doctors Use HELOCs
- Home improvements that add value to your property.
- Covering short-term needs, such as tuition, relocation, or medical expenses.
- Refinancing loans at potentially lower rates.
- Funding investment opportunities, like buying into a practice or rental property.
Why Physicians Turn to Splash
While HELOCs aren’t unique to doctors, the financial journey of physicians often is. From residency interview expenses to the cost of setting up a practice, doctors face challenges that traditional lenders don’t always understand.
Splash Financial began as one of the first refinance marketplaces designed for residents and fellows, and today, we work with a nationwide network of lenders to help physicians simplify debt and build wealth through student loan refinancing solutions. Over $4 billion in student loans have already been refinanced through Splash, and for more than seven years, Splash has partnered with The White Coat Investor to bring tailored financial solutions to the physician community.
As Splash CEO Steve Muszynski put it, “Helping doctors and their families find financial relief is what drives everything we do at Splash.”
More information here:
When Is It OK to Carry Debt (and How to Feel Fulfilled by It)?
The Bottom Line
A HELOC isn’t right for everyone, but when used responsibly, it can be a valuable tool for maintaining flexibility, protecting investments, and lowering borrowing costs. For physicians balancing demanding careers with financial pressures, it may provide breathing room—and open doors to new opportunities.
If you’d like to see whether a HELOC could fit your plans, you can compare options through Splash in just a few minutes with no impact on your credit score.*
Have you used a HELOC? Did it help you in your financial journey? How else could somebody use a HELOC?
[EDITOR'S NOTE: Many thanks to Splash Financial—one of our most important partners at WCI and a Platinum Level (contributing $8,000+) sponsor for the WCI Medical School Scholarship—for helping physicians get the best rates on their student loans and HELOCs. This is the second of our two scholarship-sponsored posts for 2025. Thank you for supporting those who support this site and especially the scholarship. All proceeds go to the scholarship winners.]
*To check the rates and terms you qualify for, Splash conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is a hard credit pull and may affect your credit.
While the points in this article are technically accurate, I worry about the underlying message it sends to physicians. By calling a HELOC “smart,” it risks encouraging us to justify spending we already want to do but don’t have the cash for. Physicians, like all high-income professionals, are particularly prone to this kind of rationalization.
This framing also deviates from the standard messaging of The White Coat Investor: in the vast majority of cases, if physicians want to buy something—a remodel, a vehicle, or any other major purchase—the smartest strategy is to save up the money and pay cash. As often discussed, there are some reasonable uses for debt, such as a mortgage on a home or student loan debt to train to become a physician. But outside of those, in most cases the smarter move is to avoid debt entirely. I’d hate for this article to distract from that core message.
To my mind – and I don’t know if the article suggests this – obviously if you can’t pay cash you can’t afford it. However this might address having emergency funds. Emergency funds – cash and its equivalents – will be out of the market for 40Y or more. Perhaps having access to loans – and this could even be access to a credit card – might allow you to avoid a large EF and instead keep that money in the market. The capital gains over a long period of time is very likely to result in meaningful gains vs the interest one might need to pay using HELOC or CC. The cost of interest on the HELOC would be kind of like insurance and peace of mind, the same function as the EF. So to my mind it might be HELOC replaces EF.
Keith, I appreciate your thoughtful comment. You’re right—mathematically, there are scenarios where using a HELOC instead of holding large amounts of cash can make sense. But so much of personal finance isn’t just math—it’s behavior.
From a behavioral standpoint, the research is clear: when we finance purchases, we tend to spend more, and when new liquidity is freed up, we often use it. My concern is that if physicians begin thinking of their home equity as a ready pool of cash, their spending won’t remain static. They’ll often end up spending more, just as people who finance cars typically buy more expensive vehicles than they would if paying cash.
And from a risk standpoint, a HELOC is not the same as an emergency fund. Access to that line of credit can be reduced or frozen—often at the exact moment you most need it, such as during a financial downturn. Cash is certain; a HELOC is not.
That’s why, while I understand the math, I remain very hesitant to encourage physicians to view HELOCs as “smart tools.” For most, the safer and more behaviorally sound strategy is to save, pay cash, and keep true emergency reserves liquid and independent of lenders.
Understood. I came out of residency just after 2000 dot-com where I had no assets so I’ve been through a few crashes and just kept on keeping on so I think my risk tolerance is above average. With that said I’m approaching retirement age so I probably need to begin transitioning to a less aggressive portfolio. With THAT said … emergency fund is something you can tap to get through the next few months or year or two. It’s a synonym – to my mind – to “reliable capital if necessary.” So it could even mean equities if your portfolio is massive enough and you don’t mind selling at 50% down. I don’t know that I would have that tranquility or equanimity so personally I’d have an EF. But it could nonetheless be a HELOC or even your credit cards. 24% interest is insane though. I think a young person should probably have enough cash for unexpected lumpy expenses – car breaks down or AC breaks down.
We routinely used our HELOC during the accumulation phase of our career to smooth out lumpy expenses and let cashflow to catch up over a period of several months.
Particularly property and income tax seasons and holiday spends. This was also times with promotional HELOC teaser rates so much of the time it was quite low rates in low single digits…..well worth it over holding a larger cash asset or worse selling taxable instrument creating tax drags.
Discipline absolutely needed to not let it become yet another debt.
As a smoothing agent? Priceless.
Paid off my house before 40 and froze all my credit. My ethos – if I don’t have cash, I can’t afford it.
Re the accompanying photo of a huge mansion to this article — perhaps don’t buy such a huge house and then you won’t need to use debt to fund your lifestyle. Sounds like this is a paid post, though.
Paid yes, but the pay goes 100% to the WCI Scholarship. We try to have five of these every year. These are the only sponsored posts on the blog.
Timely article. I am in a real estate partnership with 4 of my partners on the building where our practice is located. We also have 1 tenant which is a dental practice. 2 of the partners will be retiring in a few years and I suspect they will want their equity out of the building sooner rather than later. I am 20 years younger than those 2 partners and would like to hold onto the building forever. The author mentions HELOCs as a potential source to buy into a building. What about buying out my partners? What have other partners done in this situation? We have a 30 year fixed mortgage on the building at a low rate (refinanced in 2021) and it will be paid off in a little less than 10 years.
Yes, you could use it to do that if there’s enough equity there.
I recently had a slam dunk real estate opportunity arise, but I was uncomfortable committing too much cash to the project and putting a stressor on our short term finances. A HELOC would have been a great tool for bridge financing. I don’t think it’s something I would use often, but at times seems like it could be very beneficial. A HELOC can be a tool in the toolbox, but certainly should not be a way to inflate one’s lifestyle or add debt to the pile.
I agree. Just another tool, but certainly one that lots of people get in trouble with due to behavior and risk.
Article failed to mention that the interest rate on HELOCs most frequently float. So leveraging one in a highly volatile or high interest rate environment can oftentimes result in reconsidering its benefit/risk. Of course tempered by one’s risk tolerance.