The Quick Read: Yes, you can get a home equity loan on a rental house, but it is a narrower product than a primary-home loan, with fewer lenders, a 70% combined loan-to-value ceiling, a 700 minimum credit score, and a $500,000 maximum line on investment lines in Lendmire’s wholesale network. Rental owners who want more leverage or entity ownership usually end up looking at a first-lien DSCR cash-out refinance instead. Every figure here is subject to lender guidelines and a full file review.
- On an investment property, the network’s equity line caps at 70% combined loan-to-value (CLTV), and 70% is the top tier.
- Credit must be at least 700, and the line tops out at $500,000.
- An LLC cannot hold title on these lines, so entity-owned rentals need a different route.
- You can also borrow against your own home to fund a rental, which is a different transaction with different risk.
- A DSCR cash-out refinance qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Why Is a Rental Harder to Borrow Against?
Lenders see a rental as a business asset, not a home. A borrower under stress tends to protect the house they live in first, so lenders price and limit rental collateral more tightly.
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.
NerdWallet says a HELOC on an investment property is possible. It adds that you may have fewer lenders to choose from and may borrow less than against your primary home. The result is the same pattern this network shows: lower leverage, higher credit expectations, and a smaller menu of lenders.
Many people also use “home equity loan on a rental” to describe two different deals. The next section separates them.
Borrow Against the Rental, or Against Your Home?
These are two different transactions, and mixing them up leads to bad decisions. In the first, the rental secures the loan. In the second, your primary residence secures it and the cash goes toward the rental.
| Factor | Lien on the rental | Lien on your home |
|---|---|---|
| Collateral at risk | The rental | Your primary residence |
| Network CLTV ceiling | 70% on investment lines | Up to 90% at 720+ credit |
| Lender menu | Narrow | Broader |
| Main underwriting focus | Personal credit and debt-to-income | Personal credit and debt-to-income |
The 90% figure applies only to primary-residence and second-home lines, and only at a 720-or-better credit profile. It never applies to an investment property. Other sources report different CLTV figures for equity lines, but those describe the broader market and not this network.
If you borrow against your home, your rental can fail and your house is still on the hook. Lendmire’s piece Will You Make Money If Using Home Equity To Buy Property For Rental? walks through that tradeoff in detail.
What the Network’s Investment Line Looks Like
On an investment property, the network offers a standalone line of credit. It can sit in first or second lien position. Here is how the key terms stack up across the select wholesale lenders:
- Leverage: 70% CLTV is the ceiling on an investment property. Credit scores of 700 and 720 both reach it, so a higher score buys eligibility, not extra leverage.
- Credit: 700 is a hard floor on investment lines, with no tier beneath it.
- Line size: The maximum on an investment line is $500,000. Lines above that are for primary residences only.
- Draw structure: Investment lines use a 5-year interest-only draw followed by a 25-year fully amortizing repayment. At least 75% of the line is drawn at closing.
- Pricing: It floats through both the draw and repayment periods and never converts to fixed.
- Debt-to-income: The maximum is 50%. The lender reviews your file on the interest-only payment calculated on the maximum draw.
- Valuation: An investment line is capped at $500,000, so it falls in the automated-valuation lane. These lines commonly close without a traditional appraisal, though a higher CLTV may call for a second valuation.
For comparison, NerdWallet describes a typical market line as a 10-year draw with interest-only payments at a variable rate, then repayment over up to 20 years. The network’s investment structure is shorter on the draw and longer on repayment.
Do not confuse the draw with a free pass. The interest-only period keeps the carrying cost low at first. When repayment starts, principal comes due, and a floating payment can step up and cut into the rental’s cash flow.
Which Rentals and Borrowers Qualify?
Eligible property types are single-family homes, 2-4 unit properties, PUDs, townhomes, and condominiums, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not offered.
Title matters as much as the property type. The borrower must hold title as an individual or through a revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. That is the sharpest difference from a DSCR loan, and it catches many landlords off guard.
If your rental is already deeded to an LLC, you have two options. You can change the vesting, which has title and transfer consequences and requires checking the existing mortgage’s due-on-sale clause. Or you can use a DSCR cash-out refinance, which can close in an entity, subject to program terms.
Other guardrails apply to the borrower:
- You can have at most three lines with the network. Combined exposure caps at $2,000,000 on the higher-leverage program and $750,000 on the other. A borrower with more than 15 financed properties is not eligible.
- A bankruptcy needs 4 years of seasoning from discharge or dismissal. Investment files follow a 7-year path after a foreclosure and 4 years after a deed-in-lieu, pre-foreclosure, or short sale.
- Availability is limited to Lendmire’s 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than the DSCR footprint, which covers 41 markets including Washington, D.C.
- Some states add limits, such as a bar on properties listed for sale in the past 60 days in NC, PA, TN, TX, and WA. Others cap CLTV by credit profile, as in NM and OH.
How Much Can You Actually Borrow?
Combined loan-to-value (CLTV) adds your first mortgage and the new line, then divides by the appraised value. Your room is the cap minus what you already owe, measured as a share of value.
Run the numbers on a simple illustration. Say a rental has a first mortgage equal to 50% of its value. With a 70% CLTV ceiling, you have 20 points of value to borrow against. Now say the first mortgage is already at 65% of value. You have 5 points of room, and the line may not be worth setting up.
A paid-off rental works differently. With no first mortgage, the new line would be the first lien. The argument that a second lien lets you keep an existing low first-mortgage rate no longer applies.
A short ownership history matters too. Equity you recently built through a rehab is only as good as the valuation behind it. A higher appraised value depends on comps and underwriter review, and the CLTV cap stays the same either way.
How Lenders Review a Rental File
A traditional equity line is underwritten on you, not just the property. Expect the lender to look at personal credit, debt-to-income, and the property’s value and liens. How rental income counts toward your debt-to-income varies by lender and by file.
A landlord’s document list usually includes:
1. Government ID and proof of title in your name or revocable trust.
2. A current mortgage statement for every financed property, since housing history is checked across all of them.
3. Leases or a rent roll for the subject property.
4. Traditional personal-income documents showing rental income, where the program asks for them.
5. Proof of homeowner’s insurance on the rental.
6. Bank statements, if the program calls for deposit analysis.
Credit is a single-bureau score keyed to the primary wage earner. The report can be no more than 90 days old at closing, and rescores are not allowed. The next steps are a valuation, a title search, and a review of the combined liens.
Occupancy deserves a plain note. If you live in one unit of a 2-4 unit property, a lender treats the loan as a primary-residence line, which has different limits. A recently converted home is judged on how it is occupied now. Mixed-use or commercially zoned buildings are not offered.
Equity Line, Home Equity Loan, or Cash-Out Refinance?
An equity line typically adds a second lien and leaves your first mortgage alone. A cash-out refinance replaces the first mortgage with a new, larger one. A DSCR cash-out is the investor version of that refinance.
| Feature | Equity line | Cash-out refinance | DSCR cash-out |
|---|---|---|---|
| Lien | Second (or first if paid off) | Replaces first mortgage | Replaces first mortgage |
| Reviewed on | Personal credit and DTI | Personal credit and DTI | Property rent vs. payment |
| Title | Individual or revocable trust | Varies | Entity possible, per program terms |
| Existing first mortgage | Stays in place | Paid off | Paid off |
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
DSCR stands for debt service coverage ratio. It divides the property’s monthly rent by its monthly payment of principal, interest, taxes, insurance, and any HOA dues (PITIA). Lenders look at the ratio rather than your personal debt-to-income. Lendmire’s complete DSCR loans guide covers the full mechanics.
Here is what the wholesale network typically shows on a DSCR cash-out:
- Leverage: Cash-out tops out around 75% LTV on standard rentals, and 70% on short-term-rental collateral.
- Seasoning: About 6 months of ownership is the common expectation.
- Coverage: 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
- Credit: A 620 floor exists in parts of the network, most programs want around 660, and 700 or higher unlocks the strongest leverage tiers.
- Loan size: Standard programs go up to $3,000,000, and smaller balances are available through select lenders.
- Reserves: They vary by lender, leverage, loan size, and transaction type. About 6 months of PITIA is common.
Clearing 1.00 does not mean the property produces positive cash flow. DSCR counts rent against PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.
The higher leverage ceiling is the main reason investors switch. A DSCR cash-out reaches about 75% on a standard rental, and the equity line stops at 70% CLTV. The cost is that you replace the first mortgage. A tradeoff like this is why Lendmire’s rundown of what banks offer home equity loans on rental property is worth reading before you choose a path.
Key Terms Defined
CLTV (combined loan-to-value): Your first mortgage plus the new line, divided by the property’s appraised value.
HELOC: A home equity line of credit, a revolving line you borrow against your equity.
Open-end vs. closed-end: An open-end loan lets you keep borrowing as you repay. A closed-end loan pays out one lump sum with no redraw.
Lien position: The order lenders get paid if the property is sold to cover debts. A second mortgage is paid after the first.
Vesting: How title to the property is held, such as an individual, a trust, or an LLC.
DSCR: Monthly rent divided by the monthly PITIA payment.
PITIA: Principal, interest, taxes, insurance, and association dues.
What Are the Risks and Tax Points?
The main risk is stacked debt. The CFPB explains that home equity loans and HELOCs are common second mortgages. It notes that adding debt makes you more vulnerable if you face financial difficulty. The CFPB’s HELOC booklet adds that the home secures the line, so a missed payment puts that property at risk.
Floating payments are the second risk. Plan for the repayment step-up before you draw.
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.
What If You Are Declined?
A decline usually points to one of four gaps: credit or debt-to-income that is too tight (credit below 700 or debt-to-income above 50%), title held by an LLC, too little equity under the 70% cap, or a property type that is not offered. Each one has a different fix.
- Credit or DTI too tight: Pay down balances before you reapply.
- LLC title: Compare a vesting change against a DSCR cash-out.
- Not enough equity: Wait for appreciation, or reduce your first mortgage balance.
- Property type not offered: Manufactured homes, log homes, and barndominiums are also outside the network’s DSCR programs, so a different property or lender type is the answer.
A larger down payment on a purchase lowers the monthly payment and can lift the DSCR. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Frequently Asked Questions
Can I use my rental’s equity to buy another rental?
Yes, with the right structure. An equity line on the rental or on your home can supply the down payment. A DSCR cash-out on the rental can also release equity, up to about 75% LTV on standard rentals. Each path carries different risk to your collateral. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Can an LLC borrow against a rental through a home equity line?
Not on the network’s investment equity lines. The title must be held by an individual or a revocable living trust. An LLC-owned rental needs a vesting change or a DSCR cash-out refinance, subject to program terms.
Does the equity line replace my first mortgage?
No. It adds a lien and your first mortgage stays in place. A cash-out refinance replaces it. On a paid-off rental, the new line would be the first lien.
How is a DSCR loan different from a home equity loan?
A DSCR loan is a first-lien purchase or refinance. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. A home equity line typically adds a second lien and leans on your personal credit and debt-to-income.
Can I get a line on a duplex or fourplex?
Yes. 2-4 unit properties are eligible, along with single-family homes, PUDs, townhomes, and condos. If you live in one unit, it is treated as a primary residence with different limits.
Next Step
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. Lendmire is a broker that arranges financing through select lenders in its wholesale network. This is not a commitment to lend.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and real estate investors in its 16 full-service states open home equity lines of credit arranged through wholesale lenders. Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. NerdWallet – Can you get a HELOC on an investment property?
2. CFPB – What is a second mortgage loan or junior lien?
This article is part of Lendmire’s investment property HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a BRRRR Investor Refinance a DSCR Loan After Bridge Exit? · How to Cash Out on the Full Value After a DSCR Exit From Hard Money · How Much Equity and Reserves a Rental HELOC Lender Expects
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.