The Quick Read: Multiply each line’s drawn balance by its annual rate and divide by 12 to get the draw-period payment. Then rerun the balance as an amortizing payment for the repayment phase. Add every line together, and test the total against rent.
- Lenders test the full line. Across Lendmire’s wholesale network, an investment line is reviewed on an interest-only payment calculated on the maximum draw, not the amount you plan to use.
- The structure is short. An investment line typically runs a 5-year interest-only draw and a 25-year repayment, with at least 75% drawn at closing, subject to lender guidelines.
- Coverage is not cash flow. The HELOC payment sits outside a DSCR loan’s ratio, but it still comes out of your pocket every month.
- Every line counts against you. Each added payment raises your personal debt-to-income ratio, which can cap the next line or loan.
What Are the Two Payment Phases?
A home equity line of credit (HELOC) is a revolving credit line secured by property. Its payment has two phases. During the draw period you can borrow, and the payment is often interest-only. After that, a repayment period begins and the payment amortizes, meaning each payment covers interest plus principal.
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.
Yahoo Finance describes a typical bank structure as a 10-year draw followed by a 20-year repayment. Lendmire’s investment-property line runs shorter: 5 years of interest-only draw, then 25 years of repayment. The reset arrives sooner on this structure, so a portfolio plan has to build it in from day one.
The rate on these lines floats. On the lines Lendmire places through its network, pricing floats through both the draw and the repayment period and never converts to fixed. Your payment can change in any month, even when you borrow nothing new.
How Do You Estimate the Draw-Period Payment?
The draw-period payment equals the drawn balance times the annual rate, divided by 12. Interest accrues only on money you have actually drawn, not on the full limit. CNBC Select frames it the same way: the payment depends on what you owe, the rate, and which phase you are in.
Use that formula, then adjust for three habits of a growing portfolio.
1. Use the drawn balance, not the limit. An undrawn line costs nothing in this phase.
2. Remember the minimum draw. On Lendmire’s investment-property lines, at least 75% of the line is drawn at closing. Your real starting payment is therefore close to the full-line payment, not zero.
3. Add the lines together. Each rental line carries its own balance and its own payment. The portfolio payment is the sum.
Rate sensitivity is simple in this phase. The payment moves in proportion to the rate. If the rate climbs by a tenth of its value, an interest-only payment climbs by a tenth.
Interest-only does not reduce debt. Every dollar you draw stays owed until the repayment phase begins.
How Do You Estimate the Repayment Payment?
For the repayment phase, use the standard amortization formula. The payment equals the balance times the monthly rate, divided by one minus (one plus the monthly rate) raised to the negative number of months. On a 25-year repayment, the number of months is 300.
The inputs are the balance at the end of the draw, the rate at that point, and the repayment term. CNBC Select walks through the same calculation. Any amortization calculator does the arithmetic for you.
The result is always higher than the interest-only payment on the same balance. Principal now has to be repaid across a fixed number of months. The size of the jump depends on the rate and the term, so model it yourself instead of trusting a rule-of-thumb percentage. Voluntary principal payments during the draw shrink the balance and soften the later step-up.
Why the Qualifying Payment Is Not Your Payment
Underwriting and real life use different numbers. A lender in Lendmire’s network reviews an investment line on an interest-only payment calculated on the maximum draw. An undrawn line therefore counts as if it were fully drawn.
Keep two figures for every line:
- The qualifying payment: the interest-only payment on the full line. It feeds your debt-to-income ratio, or DTI, which is your monthly debt payments divided by your gross monthly income. The maximum on these lines is 50%.
- The expected payment: your drawn balance times the rate, divided by 12. It feeds your cash-flow budget.
Because 75% is drawn at closing, the two figures start close together. They diverge only if you leave part of the line undrawn.
Lendmire’s investment-property lines are underwritten on the borrower’s credit and DTI, not on the property’s rent. The minimum credit score is 700, and the ceiling is 70% combined loan-to-value, or CLTV. CLTV adds the first mortgage and the new line together, then divides by the property’s value. A line on an investment property tops out at $500,000, subject to lender guidelines and full file review. Credit above 700 buys eligibility, not extra leverage.
Scaling to a Portfolio: A Three-Line Walkthrough
Picture an investor who adds one rental and one line at a time. For simplicity, assume each line is the same size, and call the interest-only payment on one full line “1P.” This is a modeled illustration, not a market figure.
| After deal | Lines | Qualifying payment | Expected payment (at 75% drawn) |
|---|---|---|---|
| 1 | 1 | 1P | 0.75P |
| 2 | 2 | 2P | 1.5P |
| 3 | 3 | 3P | 2.25P |
Three things show up in the table.
- Payment grows in a straight line. Each new line adds the same amount in the draw phase.
- Qualifying payments run ahead of real ones. The gap is the undrawn quarter, and it widens with each line.
- Each line has its own clock. Line one resets five years after its own closing, line two later, line three later still. A staggered portfolio steps up in stages, not all at once.
Plan for the portfolio’s first reset while later lines are still in their draw phase. Overlap is where payment strain tends to hide. The limits matter too. Lendmire’s network allows a borrower three lines, and a borrower with more than 15 financed properties is not eligible. For how much one line can fund at each purchase, see Lendmire’s piece How Much a Rental HELOC Funds Per Deal in a Growing Portfolio.
Where Does the Payment Sit Against Rent?
The HELOC payment is a real monthly cost, but it sits outside DSCR. DSCR, or debt service coverage ratio, divides monthly rent by PITIA: principal, interest, taxes, insurance and any HOA dues on the property’s main loan. On a DSCR loan, the HELOC payment generally stays outside that ratio. A second lien adds a payment that the ratio ignores.
That is why clearing the benchmark is not the same as making money. Repairs, vacancy, management, utilities and capital spending also sit outside DSCR. For the program mechanics, see the brokerage’s complete DSCR loans guide. Here, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Run the layers on one property, using index units where rent equals 100. These are modeled assumptions.
| Line item | Units |
|---|---|
| Rent | 100 |
| PITIA on the main loan | 70 |
| DSCR (100 ÷ 70) | about 1.43 |
| Operating costs outside DSCR | 12 |
| Left after main loan and costs | 18 |
| HELOC payment | 12 |
| Left after the HELOC | 6 |
The same property looks strong on one test and thin on the other. Divide rent by everything you pay, meaning PITIA, operating costs and the HELOC payment together. That gives an all-in coverage of about 1.06 here.
If a line funded several properties, allocate its payment to the property that secures it, then also spread it across the portfolio to see the whole picture.
Stress Grid: What Happens When Things Move?
Run your numbers under pressure before you draw. Use the same property and apply four shocks, one at a time and then together. The thresholds below are a personal rule of thumb, not a lender guideline: above 1.05 is go, 0.95 to 1.05 is watch, below 0.95 is act.
| Scenario | All-in coverage | Read |
|---|---|---|
| Base case | 1.06 | Go |
| HELOC payment up a quarter (rate rise) | 1.03 | Watch |
| Rent down 8% (about one vacant month a year) | 0.98 | Watch |
| Payment up by half (repayment reset) | 1.00 | Watch |
| Rate rise and vacancy together | 0.95 | Watch |
The 50% reset row is a modeled assumption, because the true step-up depends on your balance, rate and term. Replace it with your own amortization result. If the combined row lands in act territory, shrink the draw, pay down principal during the draw period, or plan an exit.
BiggerPockets investor commentary frames HELOCs as short-term bridges with a refinance or sale as the exit. That is sound practice. It also warns that variable rates can squeeze a portfolio if a property underperforms.
How the Payment Shapes Your Next Approval
Every HELOC payment, counted at the full line, feeds the personal DTI that underwrites your next line. It also counts against loans underwritten on personal income. A portfolio investor can show strong rents and still hit a DTI ceiling, because each mortgage and each line adds a monthly obligation. The effect is strongest for self-employed investors and anyone carrying many mortgages.
A DSCR purchase works differently. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. That means a payment that fits your budget can still crowd out a line that depends on DTI, while the DSCR purchase after it barely notices.
Reserves deserve their own check. They vary by lender, leverage, loan size and transaction type, and they commonly run around 6 months of PITIA. Ask whether borrowed funds can count toward them on the next file, since that depends on the lender. The brokerage covers this in its piece How a Rental HELOC Sizes Reserves for a Growing Portfolio.
Edge Cases Where the Formula Breaks
The simple formula understates payments in several situations.
- Principal-inclusive minimums. The CFPB’s HELOC booklet notes that some plans include a slice of principal in the draw-period minimum, which typically does not repay the loan by the end of the term. An interest-only formula understates those plans.
- Balloon repayment. The same booklet notes that some plans make the whole balance due at once. Read the agreement before you model anything.
- Fixed-rate conversion. Some bank lines let you lock part of the balance. The lines in Lendmire’s network do not convert, so model a floating rate throughout.
- LLC title. On Lendmire’s network, title must sit with you or an inter vivos revocable living trust. A property already deeded to an LLC needs a vesting change, a line on another personally titled property, an entity-level credit line, or a DSCR cash-out refinance, subject to program terms. Investor commentary on BiggerPockets says LLC ownership scares off many HELOC lenders.
- Heavy portfolio DTI. A large book of mortgages can push DTI past the ceiling even when every property cash flows.
HELOC or DSCR Cash-Out?
A DSCR cash-out refinance replaces the existing mortgage with a larger one and hands you the difference. It is a closed-end term loan, so you estimate it as a single principal-and-interest payment, with no draw and no reset.
| Factor | Investment HELOC | DSCR cash-out refinance |
|---|---|---|
| Underwritten on | Your credit and DTI | Property rent, subject to guidelines |
| Payment type | Interest-only, then amortizing | Standard term payment |
| Payment moves with rate | Yes, all phases | Depends on the structure chosen |
| Title | Individual or revocable trust | LLC allowed, subject to program terms |
| Leverage ceiling | 70% CLTV on investment property | About 75% LTV on a standard rental |
For short-term-rental collateral, a cash-out tops out around 70% LTV. A DSCR cash-out also expects about 6 months of seasoning, and the term spine is the 30-year fixed. Extended terms and interest-only periods are available through select lenders in the network, and adjustable structures exist too. The right choice depends on how long you hold the money and how much rate risk you can absorb. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
A Pre-Draw Worksheet
Work through these steps before you draw on any line.
1. Write down each line’s drawn balance, rate and the date its draw period ends.
2. Compute the draw payment: balance × rate ÷ 12.
3. Compute the repayment payment with the amortization formula for the remaining term.
4. Sum all lines for the portfolio view, in both phases.
5. Run all-in coverage per property, then rerun it with a higher rate and one vacant month.
6. Add every payment to your DTI and check the headroom for the next purchase.
7. Name your exit: refinance, paydown or sale.
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
HELOC: a revolving credit line secured by property that you can borrow against and repay repeatedly.
Draw period: the stretch when you can borrow from the line, often paying interest only.
Repayment period: the stretch after the draw ends, when the payment includes principal.
Amortization: paying a loan down over time through payments that cover both interest and principal.
CLTV: combined loan-to-value, the total of all loans on the property divided by its value.
DTI: debt-to-income ratio, your monthly debt payments divided by gross monthly income.
DSCR: debt service coverage ratio, monthly rent divided by the property’s monthly PITIA.
PITIA: principal, interest, taxes, insurance and any association dues on a property’s main loan.
Frequently Asked Questions
Do I calculate the payment on the limit or the drawn balance?
Use the drawn balance for your real budget, since interest accrues only on borrowed money. Use the full line for qualification, because the brokerage’s network reviews an investment line on interest-only payments at the maximum draw. Keep both numbers on your sheet.
How big is the jump when repayment starts?
It depends on your balance, rate and term, so no single percentage is reliable. Run the amortization formula on the balance you expect at the end of the draw. On the brokerage’s investment-property line, that reset arrives after 5 years, with 25 years of repayment following.
Does a HELOC payment lower my DSCR?
Not on a DSCR loan, where it generally sits outside the ratio. It still reduces your real cash flow, and it counts toward your DTI on loans underwritten on personal income. Clearing 1.00 is a coverage test, not a cash-flow guarantee.
Can my LLC hold the line?
Not on the brokerage’s network. Title must sit with you or a revocable living trust. If the rental already sits in an LLC, a vesting change or a DSCR cash-out refinance may fit better, subject to program terms.
How many lines can I carry?
The brokerage’s network limits a borrower to three lines, and a borrower with more than 15 financed properties is not eligible. Each line also carries its own payment, so the combined figure can strain DTI before you reach the limit. Availability is also narrower than the 41-market DSCR footprint, since lines are offered in the brokerage’s full-service states.
Next Steps
If you are considering a home equity line and want to see how the numbers work, the brokerage can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Every figure is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Payment math is the first draft of a portfolio plan. The investors who last are the ones whose coverage still holds when the reset arrives.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and real estate investors in its 16 full-service states. Home equity lines of credit are arranged through wholesale lending channels; Lendmire brokers the line and the lender underwrites each application under its occupancy-based guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Yahoo Finance interest-only HELOC explainer
2. CNBC Select: how to calculate a HELOC payment
3. BiggerPockets: HELOC to fund investment property
5. BiggerPockets: HELOC on multiple properties
This article is part of Lendmire’s investment property HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash-Out Refinance Title Requirements on an Inherited Tenanted Rental · Probate and Title Requirements for an LLC-Held Inherited Rental Refinance · How to Stress-Test DSCR on a Short-Term Rental Cash-Out Refinance
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.