Hoping to get some advice on our current situation. Due to work circumstances, wife, 2 kids, and I are going to be purchasing a new house in the next 1-6 months. The homes we are looking at are in the 1.2m range, so we are going to need a Jumbo loan. Given the current state of the market, that means putting 20% down despite high income and excellent credit. We have enough cash and assets we can liquidate to get most of the way to the $240K required, but are going to come up short unless we either sell our current house or find a way to finance the gap (likely somewhere between 60-100K). Our current home is located in a highly desirable area with extremely limited inventory and would be easy to sell, but I am hesitant to move on from it as we pay less for our mortgage (with a 2.85% interest rate) than we could earn in rent for the same reasons that make it easy sell.

A mortgage broker suggested a HELOC to finance the remaining capital needed to cover the down payment, and while I have a general understanding of the concept, I don’t feel educated enough to properly assess the risk/reward. In theory it sounds like it enables the purchase of the new house while retaining our current home as a source of income, but I would really appreciate some perspective from folks more knowledgeable than I am. Is this a reasonable solution to the problem at hand or is it unwise/risky?

And yes, I know buying a less expensive house is another way to come at this problem since that reduces my down payment and allows me to use what I already have on hand.