The Quick Read: The right equity line for settling a home equity agreement is the one you can size to cover the full payoff, that fits the property’s occupancy and how the title is held, and that keeps your combined leverage inside what the lender allows. Across the wholesale lenders Lendmire works with, that answer shifts with occupancy, credit profile, and ownership structure. Lendmire is a mortgage broker, not a lender, so every figure below is subject to lender guidelines and a full file review.
- On an investment-property line, the network ceiling is 70% combined loan-to-value (CLTV), with a 700 minimum credit profile.
- A 90% CLTV ceiling exists only on primary-residence and second-home lines, and only at 720 or better.
- A property held in an LLC cannot take these lines. It needs a vesting change or a DSCR cash-out refinance instead.
- The payoff grows with appreciation, so size the line to the payoff figure, not the original advance.
- These lines are available only in Lendmire’s 16 full-service states.
What Does Buying Out a Home Equity Agreement Actually Mean?
A home equity agreement (HEA) gives you a lump sum today in exchange for a share of your home’s future value. There is no monthly payment. You settle it when you sell, when the term ends, or earlier if you buy the provider out.
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.
One provider, Hometap, says the owner can buy out its investment at any time during the 10-year term. The funding can come from savings, a refinance, or a sale. The agreement also records a lien against the property, in the form of a mortgage or deed of trust. If you do not settle by the end of the term, the provider may exercise its right to acquire a percentage ownership interest and then work with you to sell.
Terms differ by provider. Money.com reports that Unlock allows partial buyouts, but each one needs approval, a current valuation, and associated costs. Other providers require a full buyout. Read your own contract before you plan anything.
Buying out with a home equity line (HELOC) means you swap a contract with no monthly payment for a loan with one. That swap is the whole decision. You are paying off a shared-appreciation contract with borrowed money you must repay on a schedule.
What Makes a HELOC Program the “Best” Fit for a Buyout?
No single program wins. A broker who shops multiple wholesale lenders matches your scenario to the program that passes four tests:
| Test | What it asks |
|---|---|
| Size | Can the line cover the full payoff figure? |
| Occupancy | Is the property a primary home, second home, or investment? |
| Vesting | Is title held by you or a revocable trust? |
| Leverage | Do the HEA payoff and your first mortgage fit under the CLTV cap? |
Fail one test and the program is wrong for you, no matter how good it looks otherwise. Many buyout plans fail on vesting or on leverage, not on credit.
How Do the Network’s HELOC Programs Treat the Payoff?
The ceiling depends on occupancy, so you cannot quote one number. Here is how the tiers run across the network, always subject to lender guidelines.
| Occupancy | Max CLTV | Credit needed | Max line |
|---|---|---|---|
| Investment property | 70% | 700 or better | $500,000 |
| Second home | 90% | 720 or better | $500,000 |
| Primary residence | 90% | 720 or better | $500,000 |
| Primary residence | 75% | 700+ (720 on the longer-runway program) | $750,000 |
Lower credit tiers step the ceiling down. A second home runs 85% CLTV at 680 to 700, for example, and a primary residence at 640 allows 80%. Investment lines start at 700 and top out at 70%, with no tier above it. A Texas primary residence is a homestead and caps at 80% CLTV.
Other things you should know about how these lines are built:
- Structure. The line sits in first or second lien position. Investment lines run a 5-year interest-only draw followed by a 25-year fully amortizing repayment. Primary and second-home lines also offer a shorter 3-year draw option.
- Draw at closing. At least 75% of the line must be drawn at closing. That fits a payoff well, since the HEA provider is paid in one lump.
- Payments vary. Pricing floats during both the draw and repayment periods and never converts to fixed. Your monthly obligation can change.
- Debt-to-income. The ceiling is 50%. Lenders review your file on the interest-only payment calculated on the maximum draw.
- Valuation. Lines up to $500,000 ordinarily use an automated valuation. A higher CLTV may call for a second valuation, and you can request a full appraisal.
Many big banks skip investment-property lines entirely. That is why investment owners often need a broker to find a lender that writes them.
How Does the Process Work, Step by Step?
1. Get the payoff figure in writing. The buyout is the original cash plus the agreed share of appreciation, set by a new appraisal at settlement. The exact formula lives in your contract, so pull the document.
2. Check caps, fees, and valuation rights. Some contracts cap total return, charge processing fees, or let you dispute the valuation. Know what you can push back on before the appraiser arrives.
3. Confirm which property secures the HEA. The provider’s lien sits on the home it was written against. A HELOC on that same home must sit behind or alongside the first mortgage, and the HEA lien complicates priority. A HELOC on a different property you own is sometimes cleaner.
4. Match the property to a program. Occupancy, vesting, state, and property type decide which lender can write it.
5. Underwrite the line. The lender checks value, CLTV, credit, and debt-to-income. A credit report must be no more than 90 days old at closing.
6. Draw and pay off. The line funds, the title company pays the HEA provider, and the provider releases its lien.
Work backward from any contractual deadline. Valuation and underwriting both need room, and a last-minute scramble is how people end up forcing a sale.
How Do You Size the Line Against the Payoff?
Size the line to the payoff, not the original cash you received. The test is simple: first mortgage balance plus HEA payoff, divided by home value, must sit under the CLTV ceiling.
Run the numbers on a modeled investment property, with value set at 100%. Say the first mortgage is 45% of value and the HEA payoff is 20% of value. Combined, that is 65%. This clears the investment ceiling with room to spare, subject to credit and lender review.
Now try a shortfall. Suppose the first mortgage is 55% of value and the payoff is 20%. Combined, that is 75%, which sits above the 70% investment ceiling. You have three choices:
- Pay down the first mortgage or put in savings to close the gap.
- Negotiate a partial buyout, if your contract allows one.
- Move to a DSCR cash-out refinance, covered below.
Because the lender requires drawing at least 75% of the line at closing, avoid an oversized line. A line much bigger than the payoff means you borrow, and pay interest on, money you did not plan to use.
Where Does the General Rule Break?
Several edge cases decide whether a HELOC works at all.
LLC-owned rentals. These lines cannot be held by LLCs, corporations, partnerships, or irrevocable, blind, or land trusts. Title must sit with you personally or in a revocable living trust. This is the sharpest difference from a DSCR loan. A property already deeded to an LLC needs a vesting change or a DSCR cash-out instead.
Location. These HELOC programs run in only 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 Lendmire’s 41-market DSCR footprint. Some states add overlays. New Mexico and Ohio cap CLTV based on the credit profile. In Indiana, North Carolina, Pennsylvania, Tennessee, Texas, and Washington, a property listed for sale in the past 60 days is ineligible. In Texas, investment properties and second homes are non-homestead transactions, but a Texas primary residence follows the homestead rules.
Property type. Single-family, 2-4 units, townhomes, PUDs, and condos, including non-warrantable condos, can qualify. Manufactured homes, co-ops, condotels, log homes, and commercial or mixed-use properties are not offered.
Portfolio limits. A borrower is limited to three lines. Someone owning more than 15 financed properties is not eligible.
Credit history. A bankruptcy needs four years of seasoning from discharge or dismissal. Foreclosure history splits by program on primary and second homes, and one declines it entirely.
Thin equity. If the combined balance cannot fit under the cap, a HELOC cannot cover the payoff. HEA customers often did not qualify for conventional home-equity lending in the first place, as HEL News reports. Your finances may have improved since then. Do not assume they have.
When Is a DSCR Cash-Out Refinance the Better Tool?
A HELOC runs on your credit, your income, and the property’s CLTV. A DSCR loan runs on the property’s rental income. Business-purpose investor loans like this are reviewed differently from a standard owner-occupied mortgage. If you want the full picture, Lendmire’s complete DSCR loans guide walks through it.
A DSCR cash-out refinance can pay off an HEA when a HELOC cannot, such as when title is in an LLC, when the HEA payoff pushes CLTV above the investment-line ceiling, or when personal income documentation is thin. A DSCR file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
| Factor | Investment HELOC | DSCR cash-out refinance |
|---|---|---|
| Max leverage | 70% CLTV, investment line | Around 75% LTV on standard rentals |
| Credit | 700 minimum | Commonly around 660, 620 in parts of the network |
| Vesting | Individual or revocable trust | LLC allowed, subject to program terms |
| Existing first mortgage | Stays in place | Replaced by the new loan |
| Seasoning | Varies by lender | About 6 months common |
| Payments | Float, no fixed option | 30-year fixed is the spine |
Both options carry tradeoffs. A DSCR cash-out replaces your first mortgage, so you give up an existing loan to get the new one. It also usually carries higher costs than a line. On the other hand, one loan with one payment can be cleaner than stacking a second lien over an HEA lien.
Coverage works like this. A 1.00 ratio is where many select programs start, and a stronger ratio opens better terms and leverage. A separate select-lender path accepts coverage below 1.00, with leverage and terms adjusted. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, and capex sit outside the calculation.
What Does This Cost You, and What Are the Risks?
The payoff grows with appreciation, so waiting can raise your cost. The CFPB calls these products home equity contracts. It highlights high costs, complexity, and risks, including forced home sales if repayment becomes unmanageable. Its worked example on a $50,000 upfront advance showed total repayment ranging from $94,074 to $215,892, depending on the scenario. ALTA’s summary adds that the contract cost more than the comparison HELOC when the home appreciated.
A HELOC does not remove that risk. It changes the type. Instead of a growing shared-appreciation claim, you take on:
- Monthly payments. Interest-only during the draw, then fully amortizing. They can change.
- A lien on your property. A missed payment puts the home at risk.
- Closing costs. These are separate from the HEA’s own fees.
If the line replaces the HEA on a rental, you also add debt service to that rental’s cash flow. The decision is not just which instrument pays off the HEA. It is how that choice affects total leverage across your portfolio.
Who Fits and Who Does Not?
| Profile | Likely fit | Better path if not |
|---|---|---|
| Owner-occupant, 720+ credit, ample equity | Primary residence line | Home equity loan or refinance |
| Second-home owner, 720+ credit | Second-home line | Cash-out refinance |
| Investment property in your own name, 700+ | Investment line at 70% CLTV | DSCR cash-out |
| Rental held in an LLC | Not eligible as is | Vesting change or DSCR cash-out |
| Large payoff against thin equity | Often cannot reach | Partial buyout, pay down, or sale |
| Credit below the program floor | Not eligible | Build credit first, or DSCR cash-out |
Generally, the stronger your credit and the more equity you hold, the more options open up. A borrower with a high first-mortgage balance and a large payoff usually runs out of room first.
Key Terms Defined
Home equity agreement (HEA): A contract that gives you cash now in exchange for a share of your home’s future value, with no monthly payment.
CLTV (combined loan-to-value): Your first mortgage plus any other loans on the property, divided by the property’s value.
Draw period: The early years of a HELOC when you can borrow from the line and typically pay interest only.
Lien: A legal claim recorded against a property that must be paid off before the claim is released.
Vesting: How title to a property is held, such as in your own name, a trust, or an LLC.
DSCR (debt service coverage ratio): Monthly rent divided by the full monthly housing payment, covering principal, interest, taxes, insurance, and any HOA dues.
Frequently Asked Questions
Can a HELOC actually pay off a home equity agreement?
Yes, if you qualify and have enough room under the CLTV ceiling. The line funds, the title company pays the provider, and the provider releases its lien. The sticking points are usually equity, vesting, and state availability.
Can I buy out only part of the agreement?
Only if your contract allows it. Some providers permit partial buyouts, each with an approval, a current valuation, and costs. Others require full settlement, so confirm before building a plan around it.
Does my credit score matter more than the equity?
Both matter, but equity usually decides first. On an investment line, a 700 score is the floor. The 70% CLTV ceiling applies at every tier, so strong credit does not buy extra leverage there. On primary residences and second homes, 720 or better is what reaches 90% CLTV.
What if my rental is in an LLC?
These HELOCs cannot be held by LLCs. You would need to move title into your own name or a revocable trust, or use a DSCR cash-out refinance, subject to program terms. Talk to an attorney before changing title, since a transfer can affect your existing loan and insurance.
Is a HELOC cheaper than keeping the agreement?
It depends on appreciation and how long you hold. If the home gains value, the agreement’s payoff grows with it, and that is when swapping to a line tends to help. If appreciation is flat, the picture can differ. Compare total costs, not just the monthly payment.
Next Steps
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. Start with your payoff figure, your first mortgage balance, and how title is held. Those three items tell a broker which program to try first.
Appreciation sets the payoff, and the payoff sets how much room you need, so the numbers you gather this month are the numbers that decide your options later.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges home equity lines of credit in its 16 full-service states through wholesale lenders, on primary residences, second homes and investment properties. Every line is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Investors who want the broader program framework can review how DSCR loans work.
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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. Hometap
2. Money.com on home equity sharing companies
3. HEL News
4. CFPB Issue Spotlight: Home Equity Contracts
This article is part of Lendmire’s HELOC & home equity loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best HELOC Program With a Second HELOC or Home Equity Loan on the Same Property · Best HELOC Program for Buying Out a Spouse · Best HELOC Program to Tap All of the Home’s Available Equity
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.