@zomboo Perhaps what I am asking is not explicit - you are covering a scenario of refinance or HELOC where equity built in the home post acquisition is taped to borrow. I am talking about a new mortgage.
During a purchase of new home, you have down payment. At the point of availing that mortgage, that down payment is the equity you have in the whole house. Rest of it is acquisition debt. Whole of acquisition debt is not availed for your primary residence. Along with primary residence, you are acquiring something which you use for business use (or for passive activity which produces income).
In case it helps - assume 1.2 million is the purchase price of the home. 200K is down payment and 1 million is the mortgage. When you walk into the home, your equity in the home is 200K. Your acquisition debt is 1 million. 25% of the home is used for generating income through passive activity. What stops one from splitting acquisition debt of 1 million between debt on primary residence (personal debt) and debt on passive income generating activity?
