I recently moved to Boston where housing is very expensive compared to where I lived before. Buying a house requires a lot of money as down payment, and I am still short of $30000-$40000. But I have a house which is now a rental house and I can apply for home equity line of credit from it. Can I use that money to make a down payment on a second house in Boston?
Can you ? Yes.... probably. It depends on the equity you have in the existing house and the down payment you need for the new house and your debt to income ratio and a few other things.
Should you ? Probably not. HELOC likely has far higher interest than a mortgage would. There's a reason why banks don't want you to get a loan for a down payment.
Alternative: Cash-out refinance the existing house, then apply for a new mortgage (and/or wait 6 months+ in between). If you can't get enough money from the equity in your current home to make the down payment you likely wouldn't get approved after the HELOC either.