The Quick Read: Sizing the line is a three-step test: equity sets the ceiling, your documented income and debt ratio can lower it, and the title to the property decides whether you can borrow at all. Your entity changes how income is documented. It does not change the equity math.
- The equity formula is the same for everyone: value times the maximum combined loan-to-value, minus what is already owed.
- Across Lendmire’s wholesale network, an investment-property line tops out at 70% combined loan-to-value (CLTV) and $500,000 total.
- Primary-residence and second-home lines can reach 90% CLTV, but only at a 720-or-better credit profile.
- Debt-to-income is tested on the interest-only payment at the maximum draw, so a bigger line can fail even when equity is plentiful.
- An LLC cannot hold title on these lines. The borrower is you, or your revocable living trust.
Key Terms Defined
Home equity line of credit (HELOC): a revolving credit line secured by real estate that you can draw on, repay, and draw on again.
Combined loan-to-value (CLTV): all loans secured by the property, existing mortgage plus the new line limit, divided by the property’s value. Experian uses the same definition.
Qualifying income: the monthly income figure a lender accepts after applying its documentation rules.
K-1: the tax form that reports your share of an S-corp’s profit, whether or not the company paid it out to you.
Debt-to-income ratio (DTI): your monthly debt payments divided by your qualifying monthly income.
Draw period: the stretch when you can borrow from the line and pay only interest. Repayment follows, and the balance amortizes.
Expense factor: a percentage a lender subtracts from business bank deposits to estimate what you actually earn.
Vesting: the legal name on the property’s title.
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.
Who Is the Borrower? Start With Title
A home equity line for an S-corp or LLC owner is a personal loan secured by a home you hold in your own name. Your company is not the borrower. That is the first thing to settle, because it decides which properties you can use before any math starts.
Across the wholesale network Lendmire works with, title must sit with an individual or an inter vivos revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title on these lines. This is lender policy, not a rule of law. These lines are built around a personal borrower, a personal DTI review, and consumer-style workflows.
It is also the sharpest structural difference from a DSCR loan, which can generally be written to an LLC, subject to lender program eligibility. Lendmire brokers HELOCs through select wholesale partners and is never the lender. These lines are available only in the 16 states where Lendmire offers full-service lending. That is narrower than the 41-market DSCR footprint, which includes Washington, D.C.
Here is how title usually plays out:
| Where the property sits | What usually happens |
|---|---|
| Your personal name | Eligible for a HELOC file |
| Your revocable living trust | Eligible for a HELOC file |
| Single-member or multi-member LLC | Not eligible as titled |
| Irrevocable, blind, or land trust | Not eligible as titled |
If the equity you want sits in an LLC-owned rental, you have four routes. You can re-vest the property into your own name. You can draw against a different property you own personally. You can use a credit line written at the entity level. Or you can do a DSCR cash-out refinance. Each route has tradeoffs, covered below.
The Three Limits on Your Line
Your line is the smallest number produced by three separate tests: equity, program caps, and debt-to-income. Most S-corp and LLC owners hit the equity test with room to spare. The income test is where their line actually gets set.
Limit one is equity. The formula comes from Forbes Advisor: multiply the property’s value by the maximum CLTV, then subtract every existing lien. Market surveys report that most lenders cap CLTV at roughly 80–85%. On this network the ceilings are tiered by occupancy and credit, as shown here.
| Occupancy | Credit tier | Max CLTV | Max line |
|---|---|---|---|
| Investment property | 700+ | 70% | $500,000 |
| Primary residence | 720+ | 90% | $500,000 |
| Primary residence | 700+ | 85% | $500,000 |
| Primary residence | 660–719 | 85% | $500,000 |
| Primary residence | 640+ | 80% | $500,000 |
| Second home | 720+ | 90% | $500,000 |
An investment-property line has no tier above 70% and no line above $500,000. A line above $500,000 is primary-residence only, caps at 75% CLTV, and needs a full appraisal. Every figure is subject to lender guidelines and full file review.
Limit two is the program’s own rules. Credit score, property type, and total exposure all cap the line. A borrower is limited to three lines, and owning more than 15 financed properties makes you ineligible. Portfolio owners should check that count early.
Limit three is your debt-to-income ratio. DTI tops out at 50% on this network, and 45% for credit profiles from 600 to 679. A ratio above 45% requires a 680 minimum. The test uses the interest-only payment calculated on the maximum draw, not on what you plan to borrow. A larger limit therefore raises the payment the lender tests against your income.
Step-by-Step Sizing Worksheet
You can size a line in a series of steps. Run them in order and stop at the first number that binds.
1. Confirm title and occupancy. Is the property in your name or trust, and is it a primary home, second home, or rental?
2. Estimate value. Lines at or below $500,000 ordinarily use an automated valuation with no traditional appraisal, though a higher CLTV may require a secondary valuation. You can always request a full appraisal.
3. Find your CLTV ceiling. Match occupancy and credit score to the table above.
4. Subtract liens. Line room = (value × max CLTV) − first mortgage − any other liens.
5. Apply the dollar cap. Investment lines stop at $500,000. Most primary and second-home tiers stop there too.
6. Test DTI at the full limit. Add the interest-only payment on your requested maximum to your other debts, then compare the total to qualifying income.
Now two modeled examples. They use percentages of value, not market data.
Example one: a rental with a personally titled deed. Say you own a rental in your own name and hold a 700-plus credit profile. The first mortgage equals 45% of the property’s value. The 70% ceiling leaves room equal to 25% of value, and the $500,000 cap applies only if 25% of value exceeds it. On equity alone, that is your line.
Example two: your primary home. Say your credit profile is 720 or better and the first mortgage equals 60% of value. At 90% CLTV, you have room equal to 30% of value, up to $500,000. At 85%, the room drops to 25%. The credit tier alone moved the answer by five points of value.
Both examples end the same way. Equity produced a number, and then your DTI decided whether the lender will actually approve it.
How Your S-Corp Income Is Counted
For most S-corp owners, equity is not the constraint. Qualifying income is, and it depends on which documentation path you choose. The two common paths read the same business very differently.
On the full-documentation path, the lender typically wants your personal returns with K-1s, plus the business return on Form 1120-S. It generally averages net income across two years. That figure is after depreciation, owner-benefit spending, and every deduction your CPA took. An owner who retains most profit inside the company can look modest on paper.
On the bank-statement path, the lender reads deposits instead. Business statements show gross revenue, so the lender applies an expense factor. Personal statements show what actually reached you, and many programs skip the expense factor on those. Business statements suit owners who leave most cash in the company. Personal statements suit owners who pay themselves steadily. Either way, qualification runs on documented income under the applicable program, subject to lender guidelines. Lendmire’s piece Bank Statement Cash-Out Documentation for an S-Corp or LLC Owner goes deeper on the paperwork.
| Income type | Full-doc path | Bank-statement path |
|---|---|---|
| W-2 salary | Counted from returns | Shows up in personal deposits |
| Distributions | Counted if documented | Shows up in personal deposits |
| K-1 pass-through | Counted if distributed or stable | Not read directly |
| Retained earnings | Usually not counted | Not counted; business deposits are the proxy |
Watch for double counting. If you pay yourself a salary from the business account and the lender reads both the business deposits and your personal deposits, the same dollars appear twice. Underwriters strip that out. Choose one clean path and keep business and personal money in separate accounts.
Consider an owner with a low salary and high retained profit. On full documentation, the averaged net income is small, so DTI binds long before equity does. On business bank statements, deposits are large, and the expense factor trims them to a more realistic figure. The same owner can qualify for a very different line size depending on the path, and neither number is guaranteed.
A loss year works the same way. Depreciation and write-offs can push taxable income down while cash in the account stays healthy. A lender reading returns sees the loss. A lender reading deposits sees the cash. This gap is the main reason bank-statement paths exist.
Documentation by Entity
Different entities hand over different paperwork. Here is the typical list for a full-doc file.
| Entity | Typical documents |
|---|---|
| S-corp | Personal returns, K-1s, Form 1120-S |
| Single-member LLC | Personal returns with business schedule |
| Multi-member LLC | Personal returns, K-1s, partnership return |
| Sole proprietor | Personal returns, year-to-date profit and loss |
Many files also add a year-to-date profit and loss statement and business bank statements. Self-employment history requirements vary by program, so confirm the minimum with your broker before you apply.
The credit side deserves attention too. The network uses a single-bureau score model keyed to the primary wage earner, and the report must be no more than 90 days old at closing. Housing history is reviewed across all financed properties, not only the one you are pledging.
Sizing to the Purpose, Not the Maximum
Request the line your plan needs, not the largest one equity allows. That advice sounds conservative, but it is also arithmetic: the DTI test runs on the maximum, so a smaller limit gives a stronger file.
Two program features make this matter more. First, at least 75% of the line is drawn at closing on both wholesale programs. One is a 3-year draw program, with a 3-year interest-only draw and a 17-year repayment. The other is a 5-year draw program, with a 5-year draw and a 25-year repayment. Investment lines use the 5-year draw program only. So a big limit means you start with a big balance, whether or not you need it yet.
Second, pricing floats during both the draw and the repayment period and never converts to fixed. Later draws typically carry a $1,000 minimum on the program that states one. Build your plan around the payback source before you choose the limit: the rental income, the sale, or the refinance that retires the balance.
Three habits keep an S-corp or LLC owner out of trouble:
- Match the limit to a specific use, such as a down payment, rehab budget, or working capital.
- Stress-test your DTI at the full limit, not at your planned draw.
- Keep personal and business money separate. If you use the funds inside the company, contribute them with a documented paper trail. The payments stay your personal obligation.
Treat the line as one source of liquidity, not your only one. A lender’s agreement can include terms that freeze or reduce a line, so read those terms before you rely on it.
What Is the Catch? Your Home Is the Collateral
Using a HELOC to fund rental investments puts a personal lien on your home, and an LLC does not shield it. The CFPB describes a HELOC as open-end credit and warns that you can lose your home if you cannot repay. Your business debts and your home are now connected.
The CFPB’s HELOC booklet adds two practical reminders. Lenders must disclose payment terms and fees up front. And the line’s terms may restrict renting out your home, so read them before you plan to house tenants.
Existing business debt also counts. A personal guarantee on a business loan can land on your personal ratios. An LLC wrapper does not remove the debt from your DTI.
When Another Product Fits Better
A HELOC is reviewed on your personal credit, DTI, and equity. A DSCR loan is reviewed on whether the property’s rent covers its payment. For an S-corp owner whose taxable income is low after deductions, that difference often decides the product.
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.
| Product | Reviewed on | Home at risk? |
|---|---|---|
| HELOC on personal property | Personal credit, DTI, equity | Yes, if it secures the line |
| Bank-statement cash-out | Documented deposits, equity | Depends on collateral |
| DSCR cash-out refinance | Rent versus payment | No, rental secures it |
| Business line or SBA loan | Business financials | Often a personal guarantee |
A DSCR cash-out refinance tops out around 75% LTV across most of the network, with about six months of seasoning as the common expectation. It can generally be written to an LLC, subject to lender program eligibility. Coverage of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Credit minimums run around 660 on most programs, with a 620 floor in parts of the network, and 700-plus unlocks the strongest leverage.
Do not confuse coverage with cash flow. DSCR compares rent to PITIA (principal, interest, taxes, insurance, and association dues) only. Repairs, vacancy, management, and capital expenses sit outside that calculation. Clearing 1.00 does not mean the property puts money in your pocket.
If your equity sits in an LLC-owned rental, DSCR is usually the cleaner lane. For the broader picture, see Lendmire’s complete DSCR loans guide. If you would rather re-vest the property into your own name, check whether your existing mortgage has a due-on-sale clause first. A transfer into or out of an LLC can trigger it, and every member must agree to a deed out of a multi-member LLC. A free-and-clear rental has no first lien to trip, but you give up that property’s liability separation.
Where the General Rule Breaks
Most sizing rules hold, but a few edge cases change the answer.
- Property types. Single-family, 2–4 unit, PUD, townhome, and condominium properties, including non-warrantable condos, are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not.
- Large lines. Above $500,000, only a primary residence qualifies, at 75% CLTV with a full appraisal.
- Credit events. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure history splits by program on primary residences and second homes: one seasons a foreclosure in 7 years and a deed-in-lieu or short sale in 4, while the other declines the history entirely. Investment files follow the 7-and-4-year path.
- Seasoning after a deed change. Lenders differ on whether LLC hold time counts or the clock restarts from the new deed.
- Listed properties. In several states, a property listed for sale within the past 60 days is ineligible.
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. This article is general education, not legal or tax advice. Consult a qualified professional, such as an attorney or CPA, about your own situation.
Common Mistakes
- Requesting the maximum line by default, then failing DTI at the full draw.
- Handing over commingled statements where salary appears twice.
- Counting gross business revenue as personal income.
- Assuming an LLC deed can still support a consumer-style HELOC.
- Treating a 90% CLTV headline as generally available. On this network it is a primary-residence or second-home figure that requires a 720-or-better credit profile.
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. You can reach the team at 828-256-2183 or request a quote.
Frequently Asked Questions
Can my S-corp or LLC take out the line itself?
Not on these lines. The borrower is you personally, or your revocable living trust, and the property must be titled the same way. Entity-level credit lines exist, but they are a different product reviewed on the business. Lendmire arranges DSCR loans that can be written to an LLC, subject to lender program eligibility.
Does a loss on my K-1 disqualify me?
Not automatically, but it lowers income on a full-documentation file. Depreciation and write-offs can make taxable income look small while cash stays healthy. A bank-statement path reads deposits instead, which can tell a different story. Each program sets its own calculation.
Should I use personal or business bank statements?
It depends on where your cash goes. Business statements show gross revenue, so lenders apply an expense factor. Personal statements show what reached you, and many programs skip that factor. Owners who leave most cash inside the company usually lean toward business statements.
How big a line can I get on a rental?
An investment-property line caps at 70% CLTV and $500,000 total, with a 700 minimum credit profile. Your existing mortgage reduces the room. DTI, tested on the maximum draw, can lower it further.
Can the line be frozen or reduced?
Possibly, depending on the terms in your line agreement. Read those terms before closing. Do not rely on a line as the only liquidity source for your business.
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. Experian – What Is a Combined Loan-to-Value Ratio?
2. Forbes Advisor – HELOC Calculator
3. CFPB – What Is a Home Equity Line of Credit (HELOC)?
This article is part of Lendmire’s home equity line of credit program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Second-Lien HELOC vs Cash-Out Refinance for a Low Fixed Mortgage · Should a Standby HELOC Replace a 401(k) Loan for Emergencies? · HELOC on a Primary Home for a Rental: When-Yes and When-No Criteria
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.