The Quick Read: A DSCR HELOC reaches up to 70% combined loan-to-value on a second lien at a 720 credit score or better, on lines from $50,000 to $500,000. It qualifies primarily on the rental’s income covering the payment, subject to lender guidelines. The first mortgage you keep counts against the 70%, so the room left is what decides the file.
- Second lien: up to 70% CLTV (first mortgage plus the full line, divided by value) at 720 or better, subject to underwriting.
- Minimum coverage is 1.10x, tested on a stress payment over the entire line.
- The line is a standalone lien. It never closes with a purchase.
- Two six-month seasoning clocks apply, and no reserves are required.
- Offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
Lendmire is a mortgage broker. It places these lines through a wholesale lender in its network, and the lender underwrites and approves every file. Everything below describes select programs, not offers.
What Is a DSCR HELOC on a Rental?
A DSCR HELOC is a revolving line secured by a non-owner-occupied one-to-four-unit rental. The first mortgage stays in place and the line sits behind it as a second lien. On a rental with no mortgage, the line is the first lien.
The rent qualifies the file. There is no traditional personal-income documentation, such as W-2s, pay stubs or a personal income calculation, subject to lender guidelines. The owner’s LLC can stay on title; the members sign as guarantors.
It is not a line on your own home. That is a different, owner-occupied product. This one is for rentals only. For the wider picture of how these loans work, see the complete DSCR loans guide.
How Does the 70% Combined Cap Work?
The 70% is combined. Add the first mortgage balance and the full new line limit, then divide by the property’s value. The cap runs on the limit, not on what you draw.
The formula is simple: value × 70% − first mortgage balance = largest line. Three modeled cases show how the first mortgage squeezes the room:
- First mortgage near 45% of value. About 25 points of value are left for the line.
- First mortgage near 50% of value. About 20 points are left.
- First mortgage at or near 70%. No room. The file stops here.
The dollar ceiling matters too. The line cannot exceed $500,000 on a second lien, whatever the equity math says. A declining-market flag lowers the ceiling by 5 points, and Philadelphia lines carry a ceiling 10 points lower.
What Credit Score and Lien Position Set the Tier?
Lien position and credit score pick the leverage cell. The tiers are ceilings, never offers.
| Lien | Score | Max leverage | Line size |
|---|---|---|---|
| Second | 720+ | 70% CLTV | $50K–$500K |
| Second | Below 720 | No cell | n/a |
| First | 740+ | 75% LTV | Up to $500K |
| First | 700–739 | 70% LTV | Up to $500K |
| First | 720+ | 65% LTV | $500K–$1M |
A first lien exists only on a rental with no mortgage. A borrower who keeps a first mortgage can only take a second lien. A 700–719 score with a first mortgage in place means no second-lien cell, which is the real obstacle, not lien type.
Mortgage history also counts: no 30-day mortgage late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu. Borrowers must be US citizens, permanent residents, or non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible.
How Does Underwriting Test the Rent?
The coverage test needs 1.10x. DSCR is gross monthly rent divided by the qualifying payment. That payment is a fully amortizing payment on the entire credit limit at a stressed start rate, set two points above the start rate. Taxes and insurance are not part of it.
Rent is the lesser of the appraisal’s market rent and the lease, unless three months of receipts support a lease above market. A lease in place is required. A two-to-four-unit property may have at most one vacant unit.
Whether the first-mortgage payment joins the qualifying payment on a second lien depends on the lender’s coverage calculation. Confirm on the file how the lender treats it. Run your own number loosely, since the lender’s math governs.
Here is the catch for owners who plan a small draw. Because the stress payment runs on the whole limit, a big line on a modest rent can fail coverage even if you would never draw it all. And since at least 80% of the line is drawn at closing, the full limit is closer to real than it looks.
What Does the File Need?
Documentation here is the property, not the person.
- Valuation. Lines to $400,000 use an automated valuation (confidence score 85 or better) with a property inspection report, or a full interior appraisal. Larger lines need a full interior appraisal. Appraisal waivers are not accepted.
- Title. A full title policy on a first lien and on second liens above $400,000. Smaller second liens take an owner-and-encumbrance report.
- Insurance. Hazard coverage that reaches both liens, with flood coverage where required.
- Entity papers. If an LLC holds title, a non-borrowing title holder signs an acknowledgment and the security instrument.
- Exposure. At most 5 loans or $2,500,000 per borrower with the program.
Most failed files trace back to two items: a first mortgage that eats the 70%, or a lease that doesn’t match the market rent. Fix both before submission.
A rental bought or refinanced inside the last 6 months is not eligible (that clock runs from the last note date to the new note date), and the owner must have held title for 6 months (settlement date to note date).
Draw Rules and Terms
The draw period is 5 years, interest-only on the drawn balance. Then a 25-year fully amortizing repayment period follows, for a 30-year maturity. The rate is variable. The rate and the pricing terms come with the lender’s HELOC disclosures.
At least 80% of the line is drawn at closing, and the closing draw is never less than $50,000. On the smallest lines, that means the whole line is drawn at closing. Later draws are at least $5,000 each.
Where the General Rule Breaks
Edge cases decide more files than the headline number does.
Property types. Single-family, PUD, townhome, two-to-four units, and warrantable and non-warrantable condominiums are eligible, and lots to 10 acres. Rural-designated property, row homes, condotels, leaseholds, land trusts, age-restricted communities, hobby farms, modular and log homes, mixed-use, and commercial or agricultural property are out. So is a property listed for sale in the prior 2 months and a property with a solar lien.
Purchases. The line never closes with a purchase and cannot stand in for a concurrent second. Buy with a first loan, then open the line after seasoning, or draw on a different rental you already own.
Later refinance. If you refinance the first mortgage, the line must be paid off or subordinated. Bills.com explains that the refinancing lender asks the line holder to sign a subordination, and lenders usually charge a fee and often apply a CLTV threshold. A zero balance does not release the lien. It stays recorded until formally closed.
Not available. A third lien, a line on your own home, or a second home.
Naming trap. A separate investment-property HELOC exists that is underwritten on the borrower’s personal income, with a 700 minimum score. It needs title in the borrower’s name or a revocable trust, so LLC-titled rentals can’t use it. The DSCR version is rent-qualified at 720 for a second lien, and LLCs are allowed, subject to program terms.
What the Investor Decision Looks Like
Start with the first mortgage balance and a realistic value. Subtract from 70% of value. If the room is thin, you have four moves: wait for paydown or appreciation, take a smaller line, use a different rental, or step up to a cash-out refinance, which replaces the first mortgage instead of sitting behind it.
The case for a second lien is keeping a good first mortgage untouched. The line funds down payments, reserves, debt payoff or rehab. It does not itself buy the next property.
Banks are a harder road. NerdWallet notes that not every lender offers a HELOC on an investment property, the pool is smaller, and qualification is strict. Investors who go the bank route often end up calling small lenders one at a time, as discussed in this BiggerPockets thread. The rental is the collateral. Missed payments put it at risk even when the first mortgage is current.
The thinking-out-loud version: a 720 borrower with a first mortgage under half of value and rent well above the stress test has a clean file. The same borrower at 65% first-mortgage leverage is mostly shopping for a cash-out refinance instead.
If you are considering a home equity line on a rental property and want to see how the numbers work, Lendmire can help you compare DSCR HELOC options based on the property, the rent, the equity available, credit profile, combined leverage, and your goals. Reach the team at 828-256-2183 or request a quote.
Key Terms Defined
CLTV: The first mortgage balance plus the new line limit, divided by the property’s value.
DSCR: Gross monthly rent divided by the qualifying payment.
Second lien: A loan that sits behind the first mortgage in repayment priority.
Draw period: The 5-year stretch when the line is open and interest-only on the drawn balance.
Subordination: A signed agreement that keeps the line in second position after a first-mortgage refinance.
Frequently Asked Questions
Does the first mortgage count toward the 70%?
Yes. The first mortgage balance and the full new line limit both count, measured against value. Whatever the first mortgage uses is gone from the 70%.
Does the limit or the drawn balance set the cap?
The limit. Both the combined cap and the coverage test run on the full credit limit, not on the amount drawn. At least 80% of it is drawn at closing anyway.
Can I get the line on a rental I just bought?
Not right away. Two six-month clocks apply: the line is not available on a rental bought or refinanced in the last 6 months (last note date to new note date), and title must have been held for 6 months (settlement date to note date).
Can my LLC hold title?
Yes, on an investment property, per lender program requirements. The members sign as guarantors, and a title holder who is not a borrower signs an acknowledgment and the security instrument.
Do I need tax returns?
No. The line qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The credit report, lease and valuation are still documented.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges DSCR home equity lines of credit on rental property in 15 of its 16 licensed states (every licensed state except Tennessee) through wholesale lenders. The line is qualified on the rental’s rent rather than the owner’s personal income, and 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.
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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. Bills.com – HELOC as subordinate lien
2. NerdWallet – HELOC on an investment property
3. BiggerPockets – HELOC on a rental property thread
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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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.