The Quick Read: You qualify when the rental’s rent covers a stress payment on the whole credit line, your combined leverage fits the tier for your credit score, and the property is an eligible type you have owned long enough. The rent carries the file, and your personal income is never calculated, subject to lender guidelines and underwriting.
- Coverage: gross monthly rent divided by the qualifying payment must reach at least 1.10x.
- Leverage: a second lien reaches 70% combined loan-to-value (CLTV) at a 720 credit score or better, on lines of $50,000 to $500,000.
- Lien position: a standalone second lien behind the first mortgage you keep, or a standalone first lien on a rental with no mortgage.
- Seasoning: a rental bought or refinanced in the last 6 months is out, and you must have held title for 6 months.
- Footprint: offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
If you own rentals in Richmond Hill, the first question is not about the rent. It is whether the property sits in a state where the program is offered. Several places share the name Richmond Hill, and this guide is national, so check your property’s state against the list below before you spend time on anything else.
Where Is This Program Offered?
The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Those states are Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Texas, Virginia and Washington.
If your Richmond Hill rental is in one of them, keep reading. If it is not, this line is not available on that property, and a cash-out refinance or a different equity product is the route to compare. Lendmire is a broker. It places these lines through a wholesale lender in its network, and the lender underwrites every file on its own terms.
What Is a DSCR HELOC?
A DSCR HELOC is a revolving line of credit secured by a rental you keep, qualified on the property’s rent instead of your personal income. DSCR stands for debt service coverage ratio, which is simply rent divided by the payment the lender tests.
A HELOC, or home equity line of credit, is an open-end credit line. The CFPB describes it as a line that lets you borrow repeatedly against your equity, first in a draw period and then in a repayment period. Equity is what the property is worth minus what you owe.
Two structures exist on this program:
- Standalone second lien. It sits behind the first mortgage you keep. Your first loan stays untouched.
- Standalone first lien. It sits on a rental that has no mortgage. A first lien exists only on a rental with no mortgage.
It is never closed together with a purchase, never a third lien, and never a line on your own home or a second home. It is a business-purpose investor product, which means it is reviewed differently from a standard owner-occupied mortgage.
The Qualification Gates, in Order
Underwriting runs as a sequence. Fail an early gate and the later ones never matter, so work through them in this order.
1. Location and property type. The property must be in a program state and be an eligible type.
2. Lien position. You hold a first mortgage you keep (second lien) or no mortgage (first lien).
3. Seasoning. 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).
4. Lease and rent. A lease must be in place, and rent is tested against the coverage minimum.
5. Credit. The score sets your leverage tier.
6. Valuation. The value sets how much equity you can reach.
7. Borrower eligibility. Citizens, permanent residents and non-permanent residents with a Social Security number qualify. Foreign nationals and ITIN borrowers do not.
The file also needs a clean mortgage history: no 30-day late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu. No reserves and no cash to close are required on this program, subject to underwriting.
How the Rent Test Works
The rent test asks one question: does the rent cover a stress payment on the full line by at least 1.10x? The stress payment is a fully amortizing payment on the entire credit limit, not on the amount you draw, calculated at the start rate plus 2 percentage points.
That is the part most landlords miss. A bank might look at interest on what you borrowed. This test sizes the payment as if you had borrowed the whole line and were already repaying it. The line is also variable rate, which is why the lender tests with a cushion.
Rent used for lender review is a single rule with one exception. Rent is the lesser of the appraisal’s market rent and the lease, unless three months of receipts support a lease above market. Market rent comes from the appraiser’s Form 1007, the single-family rent schedule. Fannie Mae’s appraiser bulletin describes that form as the way an appraiser documents estimated monthly market rent on a single-family investment property. Only the form is borrowed here. The lending rules are not agency rules.
Taxes and insurance are not part of the qualifying payment on this program. The payment is principal and interest on the full line at the stress rate.
A two-to-four-unit property may have at most 1 vacant unit. And if you keep a first mortgage, confirm on the file how the lender treats the first-mortgage payment in its coverage calculation. That treatment governs your result, so ask before you assume.
Three Ways the Ratio Can Land
Run the numbers on three landlords. These are illustrative ratios, and the lender’s own calculation governs.
- Clear pass. A duplex whose combined rent covers the stress payment at roughly 1.3x. The file clears the 1.10x minimum with room to spare.
- Borderline. A single-family rental that lands near 1.10x. A small drop in appraised market rent can push it under, so the appraisal matters.
- Fail. A rental covering the stress payment at roughly 0.95x. A smaller line is the usual fix, because the payment shrinks with the credit limit.
That last point is a real lever. The test runs on the whole line, so asking for less than your maximum can turn a fail into a pass.
How Much Equity Can You Reach?
How much you reach depends on your lien position and credit score. Leverage is measured against the property’s value.
| Structure | Credit score | Maximum leverage | Line size |
|---|---|---|---|
| Second lien | 720 or better | 70% CLTV | $50,000 to $500,000 |
| First lien | 740 or better | 75% LTV | Up to $500,000 |
| First lien | 700 to 739 | 70% LTV | Up to $500,000 |
| First lien | 720 or better | 65% LTV | Above $500,000, to $1,000,000 |
CLTV means combined loan-to-value: your first mortgage balance plus the new line, divided by value. Below 720 there is no second-lien tier. A borrower who keeps a first mortgage can only take a second lien, so a 700 to 719 score is a second-lien problem, not a first-lien one.
Here is the sizing logic in prose. On a second lien, take the property value, apply the 70% CLTV ceiling, then subtract your first mortgage balance. What is left is the most the line can be. A rental with a large first mortgage may leave little room, which is why equity-rich, lightly leveraged properties fit best.
Two adjustments can lower those ceilings. A declining-market flag lowers the ceiling by 5 points. Philadelphia lines carry a ceiling 10 points lower. These are ceilings and floors, never offers, and every figure is subject to underwriting.
Which Property Types Fit?
Single-family homes, PUDs, townhomes, two-to-four-unit buildings, and warrantable and non-warrantable condominiums are eligible. Lots up to 10 acres also qualify.
Several types are outside this program:
- Rural-designated property
- Row homes
- Condotels
- Mixed-use and commercial or agricultural property
- Leaseholds and land trusts
- Age-restricted communities
- Hobby farms, modular and log homes
- A property listed for sale in the prior 2 months
- A property with a solar lien
Check this list first if you own a mixed-use building or a row home. Those two catch a lot of urban landlords. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. And because a lease in place is required, a vacant single-family rental does not fit.
Owning Through an LLC
Your LLC can stay on title, and that is a real advantage over many bank products. Vesting in the owner’s LLC is allowed on this program, for investment property only.
The members sign as guarantors. A title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. The borrowers on the line also need not be the borrowers on your first mortgage. Entity treatment is program-specific, so confirm it against the file.
One caution. Signing as a guarantor means you carry personal exposure on the debt, so an LLC on title does not mean the loan is walled off from you.
Valuation, Draws and Terms
The valuation path depends on line size. Lines up to $400,000 use an automated valuation with a confidence score of 85 or better and a property inspection report, or a full interior appraisal. Lines above $400,000 need a full interior appraisal on Form 1004, 1073 or 1025. Appraisal waivers are not accepted.
Title work also scales with the line. A full title policy applies on a first lien and on second liens above $400,000. Smaller second liens use an owner-and-encumbrance report. Hazard insurance covers both liens, with flood coverage where required.
The draw rules are firm:
- At least 80% of the line is drawn at closing, and that 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.
- The draw period is 5 years, interest-only on the drawn balance.
- Repayment then runs 25 years, fully amortizing, for a 30-year maturity.
- The rate is variable.
That heavy up-front draw is a design feature, not a flaw. The CFPB notes that some plans require an initial draw when the line is set up. Do not size this line as a standby reserve you will leave mostly unused.
Where the General Rule Breaks
Most of these edge cases come up in real files.
A purchase cannot close with it. The line has to exist on its own, and it is never closed together with a purchase. The next property’s purchase loan is underwritten separately. A DSCR HELOC reaches equity on a rental you already own.
Exposure caps. A borrower can hold at most 5 loans or $2,500,000 with the program. A growing portfolio can hit that ceiling.
The label is loose. Many products marketed as DSCR HELOCs are actually closed-end second mortgages. The CFPB draws the line clearly: a home equity loan pays a lump sum, while a HELOC lets you draw repeatedly from a maximum amount. Ask any lender whether you can draw, repay and draw again within the draw period. If not, it is a closed-end loan.
Bank products test you, not the rent. An investment-property HELOC qualified on personal income relies on tax returns and debt-to-income, under that product’s own rules. This program qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. A self-employed landlord with heavy write-offs often finds the property-based route fits better.
A primary-home line is a different product. Some investors open a line while a property is still their home and rent it later. Renting out a home may be prohibited under the terms of your line. This DSCR line is never offered on an owner-occupied home.
Variable-rate risk. The CFPB notes that HELOCs usually have adjustable rates, with payments that vary by balance. Model your cash flow with the payment moving up, not just at today’s level. The interest-only draw period is gentle. The step into repayment is where cash flow gets tested.
What Lenders See Across the Network
Across our wholesale network, the same few issues sink files, in roughly this order: an ineligible property type, a rental still inside a 6-month clock, a lease problem, a score below the tier, thin rent coverage, and not enough equity.
Most of those are fixable before you apply. Many investors discover the seasoning clock only after they have lined up an appraisal. A few lenders in our network lean harder on the automated valuation path for smaller lines, which can simplify the valuation step. Programs change, and every file is underwritten individually.
Your Pre-Application Checklist
- Confirm the property’s state is one of the 15 program states.
- Confirm the property type is eligible, and not a row home, condotel or mixed-use building.
- Check both 6-month clocks against your closing and settlement paperwork.
- Pull your current lease. For 2-4 units, count vacant units.
- Gather three months of rent receipts if your lease is above market rent.
- Pull your first mortgage statement, if you keep one.
- Gather entity documents if an LLC holds title.
- Check your score against the 720, 700 and 740 tiers.
- Check hazard insurance, and flood coverage where required.
- Decide your line size. Remember the test runs on the whole line.
If you are short, the fixes are mostly time and size. Wait out a clock, shrink the line, or let a vacant unit fill and show receipts.
Key Terms Defined
- DSCR: gross monthly rent divided by the qualifying payment. In residential investor lending, it is a rent test, not a commercial net-income test.
- HELOC: a revolving line of credit secured by property, with a draw period and a repayment period.
- CLTV: combined loan-to-value, meaning the first mortgage balance plus the new line, divided by value.
- Lien position: whether the loan is repaid first (first lien) or after another mortgage (second lien).
- Seasoning: the waiting period since you bought, refinanced or took title.
- Vesting: how title is held, such as in your name or an LLC.
- Stress payment: the fully amortizing payment on the whole line at a higher test rate, used only to qualify.
Frequently Asked Questions
Do I need tax returns or W-2s?
No. The rent qualifies the line, and your personal income is never calculated. The lender still reviews the lease, rent evidence, credit report, valuation and title, all subject to lender guidelines.
Can my LLC hold title?
Yes, on investment property, subject to program terms. The members sign as guarantors, and a title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument.
How soon after buying can I apply?
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).
What if my rent coverage falls short of 1.10x?
Ask for a smaller line, because the stress payment is sized on the whole credit limit. A lower limit shrinks the payment. A higher appraised market rent or three months of receipts supporting an above-market lease can also help.
Why won’t my regular bank offer this?
Many banks qualify rental lines on personal income and want tax returns and debt-to-income ratios. A property-qualified line comes through a different channel. Lendmire arranges these lines through a wholesale lender, and the lender decides on each file.
Next Step
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. For the full picture of how these loans work, read the complete DSCR loans guide.
A line like this works best when the rent already covers the full line with room to spare, and that is a test you can run on paper before anyone orders an appraisal.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. DSCR home equity lines of credit — revolving lines on non-owner-occupied one-to-four-unit rentals, qualified on the property’s rent instead of the owner’s personal income — are arranged through wholesale lenders in 15 of those 16 states (every licensed state except Tennessee), and every line is underwritten by the lender under its program guidelines. 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. CFPB
2. Fannie Mae – Appraiser Update (Form 1007 purpose)
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Qualify for a DSCR HELOC for Refinancing a Balance Into a New HELOC · How to Qualify for a DSCR HELOC for Owners Weighing a Cash-Out Refinance · How to Qualify for a DSCR HELOC by State and Where It Is Offered
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
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.