The Quick Read: On an investment-property line in Lendmire’s wholesale network, the draw period is a five-year interest-only window, followed by a 25-year fully amortizing repayment period, and it fits a typical buy-rehab-rent-refinance cycle only if you plan the exit before you draw.
- The investment line runs a 5-year interest-only draw, then 25 years of principal-and-interest repayment.
- At least 75% of the line is drawn at closing, so the line is not idle dry powder.
- Pricing floats through both phases and never converts to fixed, so the payment can move without a new draw.
- Investment lines cap at 70% combined loan-to-value (CLTV), $500,000 total, with a 700 minimum credit score.
- The line is a bridge. A DSCR cash-out refinance or another exit loan usually has to retire it before the draw ends.
What Is a Draw Period, and Why Does BRRRR Care?
A draw period is the stretch when you can borrow against the line and pay only interest on what you have drawn. BRRRR stands for buy, rehab, rent, refinance, repeat. The draw period matters because the whole strategy depends on a refinance arriving before repayment begins.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
A home equity line of credit (HELOC) has two phases. In the draw phase you borrow up to your limit. In the repayment phase you stop borrowing and start paying the balance down. The CFPB’s HELOC brochure describes this same two-phase structure and notes that some plans allow interest-only payments during the draw.
For a BRRRR investor, the line usually does one of two jobs. It funds a down payment or an all-cash purchase, or it funds the rehab. Either way, the refinance later pays the line off. The draw period is the clock on that plan.
Most investors hear 10 years as the typical draw. NerdWallet’s investment-property explainer describes a 10-year draw, then repayment of up to 20 years, as the market pattern. That is a market-wide figure. The network figure for an investment line is shorter, and it is covered next.
How the Network’s Investment Line Is Built
Across the wholesale network Lendmire places files with, an investment-property HELOC is a standalone line in first or second lien position. It runs one draw structure only: a five-year interest-only draw, then a 25-year fully amortizing repayment. Pricing floats across both phases and never converts to fixed.
Here are the other investment-line terms that shape a BRRRR plan, all subject to lender guidelines and full file review:
- Leverage: The ceiling is 70% CLTV. Credit at 720 and credit at 700 both reach that same 70%, so a higher score buys eligibility, not extra leverage.
- Credit: The minimum is 700, with no tier beneath it.
- Line size: The maximum is $500,000. No investment tier sits above that.
- Drawn at closing: At least 75% of the line is drawn when the loan closes.
- Later draws: After closing, the minimum subsequent draw is $1,000.
- Qualifying payment: Debt-to-income (DTI) tops out at 50%, and the lender reviews your file on the interest-only payment calculated on the maximum draw.
Market surveys report that investment-property lines often allow up to 80% loan-to-value, according to NerdWallet. The network figure for an investment line is 70% CLTV, and nothing above it exists.
The Catch: Most of the Line Is Drawn on Day One
The “pay interest only on what you use” idea sounds like flexible dry powder. On this structure, it mostly is not.
Because at least 75% of the line is drawn at closing, interest starts on most of the limit immediately. If you size a line for a rehab you will not start for months, you pay interest on money that is sitting in your account. Size the line to the project, not to the biggest number you can get.
The re-draw side has limits too. After closing, each draw must be at least $1,000. And the “repeat” step in BRRRR only works if the line stays open and you stay eligible. Lenders can freeze or reduce a line if the property value falls or your finances change, so build a plan that does not depend on a re-draw you cannot control.
Here is a practical view from the broker’s chair. Many BRRRR files that hit trouble were sized to the maximum line and not to the budget. The stronger files draw what the project needs and keep the rest of the borrowing capacity on a different asset.
Does the Five-Year Draw Fit a BRRRR Cycle?
For most rehabs, yes. Five years is a long runway compared with the time a rehab, a lease-up, and a seasoning wait normally take. The danger is not the length of the window. The danger is a plan with no exit lender lined up before the first draw.
Seasoning is the waiting period a lender wants between buying or rehabbing a property and refinancing it. On a DSCR cash-out refinance, about six months of seasoning is the common expectation across the network. Some lenders count it from the purchase date and some from a different event, so confirm the rule before you plan.
The table below maps each BRRRR stage to the line’s status.
| Stage | Line status | Payment behavior | Where it breaks |
|---|---|---|---|
| Buy | Most of the line drawn | Interest on drawn balance | Line sized too large |
| Rehab | Draws if needed | Interest only, floating | Budget overruns |
| Rent | Balance outstanding | Still interest only | Slow lease-up |
| Season | Balance outstanding | Still interest only | Refinance rules not met |
| Refinance | Paid off by new loan | Line closes or is reset | Appraisal comes in short |
Interest runs the whole time while the property earns nothing during the rehab. A slow lease-up lengthens that carry. This is a structural point, not a market statistic.
What Happens When the Draw Ends?
When the five years end, borrowing stops and the balance amortizes over 25 years. Your payment steps up because principal now joins interest. The rate still floats, so the payment can also change with no new draw. The CFPB brochure warns that on some HELOC plans the whole balance can come due at once as a balloon payment. The network’s investment structure amortizes instead, but the agreement you sign controls the details.
Three moves can prevent payment shock:
1. Refinance before the draw ends. This is the planned BRRRR exit.
2. Pay the balance down. Excess cash from rents or a sale can reduce principal before repayment starts.
3. Test the stepped-up payment. Stress it with a higher floating cost, and ask whether the rent still covers it.
The failure case is the refinance that appraises short. The new loan must retire the first lien, the HELOC, and any rehab spend together. If the value falls short, you could face repayment with the balance outstanding. Leave margin in your numbers for that.
Which Property Should Carry the Line?
You can place the line on the BRRRR property itself, on another rental, or on a primary residence. Each choice changes the risk. On an investment property, the network’s ceiling is 70% CLTV, so the line must fit inside that limit after all existing liens.
| Collateral | Typical use | Main risk |
|---|---|---|
| The BRRRR property | Fund purchase or rehab | Condition and value unknown |
| A seasoned rental | Fund the next deal | Adds a lien to a stable asset |
| Your primary residence | Larger funding pool | Puts your home at risk |
A primary-residence line follows different rules from an investment line. Leverage tiers, draw structures, and line sizes all differ by occupancy. See Lendmire’s piece on comparing an investment-property HELOC with a home HELOC for that tradeoff. Never apply a primary-residence figure to an investment property.
Valuation is another practical point. Because an investment line caps at $500,000, it is structurally in the automated-valuation lane. It commonly closes with no traditional appraisal, though a borrower may ask for a full appraisal.
Title, Entity, and Property Edge Cases
The general rule is that a HELOC works for any rental you own personally. Here is where it breaks.
LLC title. The network’s HELOC programs require that the individual borrower or a revocable living trust hold title. An LLC, a corporation, a partnership, or an irrevocable, blind, or land trust cannot hold title. This is the sharpest structural difference from a DSCR loan, which can lend to an entity, subject to program terms. If your BRRRR property is already deeded to an LLC, you need a vesting change or a DSCR cash-out instead.
Property type. Single-family, 2-4 units, PUD, townhome, and condominium are eligible, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not offered.
Exposure limits. A borrower is limited to three lines. Combined exposure across lines caps at $750,000 on the program carrying investment lines. A borrower with more than 15 financed properties is not eligible.
Listed properties. In some states, a property listed for sale, or listed within the past 60 days, is ineligible. A fix-and-flip exit fits this poorly.
Availability. HELOC placements run through Lendmire’s 16 full-service states. That is narrower than the 41-market DSCR footprint.
Many banks simply decline to lend against rentals. NerdWallet says the lender pool for investment-property lines is smaller than for primary residences. Expect to compare several options, not one.
The Exit: Why the DSCR Cash-Out Usually Takes Over
The usual exit for a BRRRR investor is a DSCR cash-out refinance. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR stands for debt service coverage ratio, which is monthly rent divided by the full monthly payment, including principal, interest, taxes, insurance, and any HOA dues.
Across most of the network, cash-out refinances top out around 75% LTV on standard rentals. Short-term-rental collateral takes a lower ceiling, around 70% on cash-out. A coverage ratio of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Clearing 1.00 does not mean positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. Run those separately.
A HELOC and a DSCR loan test different things. The HELOC leans on your personal credit and DTI, and the DSCR loan leans on the property’s rent against its payment. That is why the HELOC line can sit on your books alongside a DSCR refinance, but the line adds to your DTI and can limit later conventional financing.
The strongest files clear both tests. They have enough equity and enough rental coverage. Read Lendmire’s complete DSCR loans guide for how the exit loan is underwritten. For a smaller draw, see the comparison of an investment-property HELOC against a cash-out refinance.
A Pre-Draw Checklist
Before you take the first draw, work through these five steps:
1. Line up the exit lender. Know which loan retires the line and what it will require.
2. Size the line to the project. Remember that most of it is drawn at closing.
3. Stress the floating payment. Test a meaningful increase, and test the full repayment payment too.
4. Check title. Confirm you hold the property personally or in a revocable trust.
5. Plan for a short appraisal. Make sure the exit still works with a lower value.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Key Terms Defined
Draw period: The window when you can borrow on the line and pay interest only on the drawn balance.
Repayment period: The phase after the draw ends, when borrowing stops and the balance is paid down with principal and interest.
CLTV: Combined loan-to-value, the total of all liens on the property divided by its value.
Seasoning: The waiting period a lender wants before a refinance, usually counted from the purchase.
DSCR: Debt service coverage ratio, monthly rent divided by the full monthly payment.
Interest-only: A payment that covers interest and nothing toward principal.
Frequently Asked Questions
How long is the draw period on an investment-property HELOC?
In Lendmire’s network, an investment line has a five-year draw followed by a 25-year repayment. Market sources describe 10 years as typical, according to Experian, but real lines vary. Your agreement sets the exact terms.
Can I re-draw after I pay the line down?
During the draw, yes, subject to a $1,000 minimum on each draw after closing. A lender can still freeze or reduce a line if the value falls or your finances change. Do not build a plan that needs the re-draw.
Do I pay interest on the whole limit?
No, you pay on the drawn balance. But at least 75% of the line is drawn at closing on this structure, so most of the limit starts accruing interest immediately.
Can my LLC hold the line?
No. The borrower or a revocable living trust must hold title. A property in an LLC needs a vesting change, or a DSCR cash-out refinance is the better fit.
What if my refinance is not ready when the draw ends?
Borrowing stops and the balance amortizes over 25 years, so your payment steps up. Because pricing floats, it can also change with the market. Pay the balance down or refinance before that point.
If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. As a broker arranging financing through select lenders in its wholesale network, Lendmire also places DSCR exit loans.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. NerdWallet, HELOC on investment property
3. Experian, draw period on a HELOC
This article is part of Lendmire’s investment property HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Cash Out One Short-Term Rental to Buy in Another Market · Rental Cash-Out Refinance Closing and Entity Rules in Several States · Cash-Out Refinance Appraisal Rules for a Paid-Off Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.