The Quick Read: The best program for you is the one whose rules match your occupancy type, title, deposit pattern, and credit profile, and for rental properties the five-year draw with 25-year repayment is the structure the network offers. It is reviewed around bank deposits instead of tax-return income, subject to lender guidelines. You pay interest only for five years, then the line stops accepting draws and the balance amortizes over 25 years.
- On an investment property, the ceiling is 70% combined loan-to-value (CLTV), with a 700 minimum credit score and lines from $25,000 to $500,000.
- At least 75% of the line is drawn at closing, so this is not a standby line.
- Pricing floats through both phases and never converts to fixed.
- The debt-to-income test runs on the interest-only payment at the maximum draw, not on what you plan to use.
- Title must sit with you personally or in a revocable living trust. An LLC cannot hold title on this product.
What Does This Program Actually Look Like?
It is a standalone line of credit in first or second lien position, secured by a property you already own. A bank statement HELOC replaces tax returns with deposit history as the income proof. A home equity line of credit (HELOC) lets you borrow, repay, and borrow again up to a limit.
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.
Lendmire is a mortgage broker. It places these files with select wholesale lenders and is never the lender itself. That matters because no single lender’s guidelines fit every borrower. A broker that sees many programs can match a file to the one whose rules it clears.
Two draw structures exist across the wholesale programs. The 5/25 line has a five-year interest-only draw followed by a 25-year fully amortizing repayment. Investment lines run the 5/25 structure only. The 3/17 line is limited to primary residences and second homes.
Many bank-issued HELOCs run differently. Experian reports that draw periods generally run five to 10 years, followed by a 20-year repayment. The 5/25 pairing has a shorter draw and a longer repayment than that usual pattern. The longer repayment spreads the balance over more years, so the repayment-phase payment is lower than it would be on a shorter schedule.
Availability is narrower than Lendmire’s DSCR footprint of 41 markets, including Washington, D.C. These equity lines are arranged in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. Every figure here is subject to lender guidelines and full file review. It is not a commitment to lend.
Key Terms Defined
Draw period: the window when you can borrow from the line, here five years, with interest-only payments.
Repayment period: the phase after the draw ends, when you can no longer borrow and the payment covers principal and interest.
Interest-only payment: a payment that covers only the interest on your balance, so the balance does not shrink.
Amortization: paying a balance down over a fixed schedule through payments that include principal.
CLTV: combined loan-to-value, meaning your first mortgage plus the new line, divided by the property’s value.
DTI: debt-to-income ratio, meaning your monthly debt payments compared with your qualifying monthly income.
Expense factor: the percentage a lender subtracts from business-account deposits to reflect the costs of running the business.
Qualifying payment: the payment the lender uses to test your DTI, which may differ from what you actually pay.
How Does Underwriting Treat Your Deposits?
Underwriting converts deposits into a monthly income number in a fixed sequence. The sequence matters more than the headline structure, because it decides how large a line you can carry. Each step below is something a borrower can prepare for.
1. Statement window. You supply personal or business statements, usually covering 12 to 24 months. Scotsman Guide reports that non-QM programs typically review that range and use business cash flow to judge repayment ability.
2. Deposit scrub. The underwriter removes transfers between your own accounts, loan proceeds, and other items that are not income. Large unexplained deposits get questioned.
3. Expense factor. On business-account deposits, the lender subtracts a percentage for business costs. It is set by the lender and the program, not by you, and it is often around half. Some programs accept a CPA or tax-preparer expense statement to support a lower factor. Personal-account programs generally skip this step.
4. Averaging. Eligible deposits, minus the expense factor, are divided by the number of months reviewed. Lumpy income lowers the average, so a few strong months do not rescue a weak year.
5. Sizing. The CLTV cap for your occupancy type and your DTI both limit the line. Your credit tier decides which CLTV cap applies.
6. Qualifying payment. DTI is tested on the interest-only payment calculated on the maximum draw. An oversized line hurts the file even if you never intend to borrow all of it.
DTI tops out at 50% on this network. It drops to 45% for credit profiles from 600 to 679, and a ratio above 45% requires a 680 minimum. For investment lines, the credit floor is 700 anyway.
Here is the part borrowers misread. Qualification on a bank statement line runs on you personally, not on the rent. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. This product tests your deposits, your credit, and your DTI. The two are different tools, and the complete DSCR loans guide covers the rent-based side.
How Does the Five-Year Draw and 25-Year Repayment Timeline Work?
You borrow most of the line at closing, pay interest only for five years, then repay principal and interest over 25 years. The payment steps up at the phase change even if you borrowed nothing new. Plan for year six on the day you sign.
| Phase | Borrowing | Payment type | Pricing |
|---|---|---|---|
| Closing | At least 75% of line drawn | Interest accrues on that balance | Floats |
| Years 1-5 (draw) | Redraw allowed, $1,000 minimum | Interest only | Floats |
| Years 6-30 (repayment) | No new draws | Principal plus interest | Floats |
The $1,000 minimum subsequent draw is the 5/25 program’s figure, and Texas is $4,000. You can also pay principal down at any time during the draw. Tennessee shortens the structure to a 5-year draw and 10-year repayment.
The CFPB explains that when the draw ends, you can no longer borrow and enter repayment. It notes that monthly payments are often significantly higher once repayment starts. Picture an interest-only balance that has not moved in five years. At the start of year six, that same balance must amortize across 25 years. The payment rises because principal joins the bill. Because pricing floats, the payment can also move with the index at any point, including in months when you draw nothing.
Interest-only does not mean cheap for the whole term. It means the balance holds still while the clock runs.
What Makes a Program the Best Fit for You?
The best program for your situation depends on occupancy, title, leverage need, and credit profile, and not on a brand name. The right criteria separate a workable line from a declined file. Use this table when comparing programs through a broker.
| Criterion | Why it matters | What to confirm |
|---|---|---|
| Occupancy | Sets the CLTV ceiling and structure | Investment is 70% CLTV, 5/25 only |
| Title and vesting | LLCs cannot hold title | Individual or revocable trust |
| Credit tier | Sets leverage and line cap | 700 minimum on investment |
| Valuation method | Cost and file complexity | Automated up to $500,000 |
| Expense factor | Drives qualifying income | Lender-set; CPA letter option |
| Exposure limits | Caps multiple lines | Three lines; 15-property limit |
A common mistake is chasing the longest runway when the real limit is DTI at the maximum draw. Another is assuming an equity-rich property earns a bigger line. CLTV caps apply regardless of how much equity you hold.
NerdWallet cites a maximum of 80% LTV, with many lenders staying under 70%. On this network, the investment-property ceiling is 70% CLTV, and nothing sits above it.
Broker matching matters because lender overlays differ in small but decisive ways. The 5/25 program wants two tradelines seasoned 12 months or one seasoned 24 months. It also applies housing-history standards across all your financed properties. A bankruptcy needs four years of seasoning from discharge or dismissal. On investment files, a foreclosure needs seven years, and a deed-in-lieu, pre-foreclosure, or short sale needs four. The 3/17 program declines foreclosure-family history on primary residences and second homes regardless of age. One borrower’s history may clear one program and fail the other, which is the reason to shop the file before applying.
Eligible property types include single-family, 2-4 units (a 640 minimum on the 5/25 line), PUDs, townhomes, and condos, including non-warrantable condos. Modular factory-built homes are eligible on the 5/25 line only. Manufactured homes, co-ops, condotels, log homes, and commercial, mixed-use, or agricultural-zoned properties are not offered.
Where Does the General Rule Break?
The rules above shift in a handful of situations. These edge cases decide more files than the headline structure does.
LLC-titled rentals. Investors often hold rentals in an LLC for liability reasons. On this product, LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. Your options are a vesting change, which carries its own considerations, or a DSCR cash-out refinance, subject to lender program eligibility. NerdWallet also points to a DSCR second mortgage as an alternative for primarily rented property.
Large lines. A line above $500,000 is primary-residence only, caps at 75% CLTV, and requires a full appraisal. The credit requirement is 700 or better (720 on the 5/25 program). An investment line never exceeds $500,000.
Primary residences and second homes. Ceilings are tiered by credit. The program ceiling reaches 90% CLTV, but only at a 720 or better credit profile, and on a line up to $500,000. A Texas primary residence is a homestead and caps at 80% combined loan-to-value. Sub-640 profiles are limited to single-family residences with a clean 12-month housing history, and that restriction reaches primary residences only.
Listed properties. A property listed for sale, or listed within the past 60 days, is ineligible in NC, PA, TN, TX, and WA. New Mexico and Ohio apply a CLTV cap that depends on the credit profile. Texas properties are limited to 10 acres.
Newly acquired rentals with weak tax returns. Depreciation and write-offs can make a return look thin. Deposit-based income helps there. It does not help if the property type or title is the problem.
Borrowers with many properties. A borrower is limited to three lines. Combined exposure caps at $2,000,000 on the 3/17 program and $750,000 on the 5/25 program. A borrower owning more than 15 financed properties is not eligible.
Balloon plans. The CFPB and Experian note that some HELOC plans demand the full balance when the draw ends. The 5/25 structure amortizes fully, but your note terms are what count.
Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal. A higher CLTV may require a secondary valuation, and you can request a full appraisal in any case.
Should You Use This Line or a DSCR Cash-Out Instead?
It depends on what you are protecting and how you want to be underwritten. Investors weighing both are choosing between a personal-income test and a property-income test. Here is how the two compare.
| Factor | Bank statement HELOC | DSCR cash-out refinance |
|---|---|---|
| Underwritten on | Your deposits, credit, DTI | Rent versus payment, subject to guidelines |
| Existing first mortgage | Stays in place | Replaced |
| Title | Individual or revocable trust | LLC possible, subject to program eligibility |
| Investment leverage | 70% CLTV | Around 75% LTV standard rentals; 70% on short-term rentals |
| Payment pricing | Floats throughout | Fixed structures available |
A DSCR cash-out refinance typically expects about six months of seasoning. It compares rent to PITIA (principal, interest, taxes, insurance, and any association dues) only. A strong ratio is not the same as positive cash flow. Repairs, vacancy, management, and utilities sit outside the calculation. Coverage of 1.00 is where select programs start, and stronger ratios earn better pricing and leverage. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted.
Keeping a low-cost first mortgage is the usual reason investors want a line instead of a refinance. The tradeoff is a floating payment and the required initial draw. The CFPB’s HELOC brochure warns that payments may change even when you borrow nothing new. Pledging one rental to fund another also puts the first rental at risk if payments fall behind.
If you want a longer interest-only runway on a bank statement file, Lendmire’s piece on a best bank statement HELOC program with a 10-Year interest-only draw period covers it.
How Do You Plan for Year Six?
The step-up is predictable, so treat it as a known cost. Size the line for the repayment phase, not just the draw. Strong files usually plan three things before they sign.
- Stress-test your income. Self-employed deposits are lumpy. Ask whether your weakest year could still carry the amortizing payment, not just the interest-only one.
- Borrow less than the maximum. Because DTI is tested on the maximum draw, a smaller line improves the file and reduces repayment risk.
- Pick your exit early. Options at the end of the draw include paying the balance down, refinancing it into a DSCR cash-out or other loan, or paying it off. A refinance depends on the property’s value, your credit, and lender guidelines at that time.
A practical scenario: say you are a self-employed owner of a duplex held personally, with a 720 score and deposits that average strongly after the expense factor. The line fits within 70% CLTV and clears DTI at the maximum draw. Shrinking the line to what you need leaves room if your income dips. The decision is not whether you can qualify, but whether year six is affordable on your worst year.
Frequently Asked Questions
How many months of bank statements do these programs review?
Most non-QM bank statement programs review 12 to 24 months of personal or business statements, according to Scotsman Guide. Which window applies depends on the program and the account type. A broker can tell you which window each program in the network uses before you apply.
Can I draw again after closing?
Yes, during the five-year draw period. The 5/25 program sets a $1,000 minimum for later draws, with Texas at $4,000. At least 75% of the line is drawn at closing, so the remaining room is small. Once repayment begins, draws stop.
Does the interest rate become fixed after the draw period?
No. Pricing on this network floats through both the draw and repayment periods and never converts to fixed. The monthly payment can change even if you draw nothing new. If you want fixed pricing, a DSCR cash-out refinance structure may fit better.
Can I use an LLC for the property?
Not on this product. Title must be held by you individually or by a revocable living trust. If the property is already deeded to an LLC, you would need a vesting change, or a DSCR cash-out refinance subject to program terms. Talk through the vesting change first, because it carries its own considerations.
Does a bank statement HELOC qualify on rent like a DSCR loan?
No. It is underwritten on you personally: deposits, credit, and DTI at the maximum draw. A DSCR loan is reviewed primarily on the property’s rental income covering the payment, subject to lender guidelines. Investors who prefer not to rely on personal debt ratios often compare both.
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. Reach the team at 828-256-2183 or request a quote. The site’s illustrative calculator gives an estimate only, not a quote or a commitment to lend.
Five years of interest-only borrowing feels long on day one, and the investors who use it well are the ones who sized the line for the year the payment changes.
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?
See your offer in seconds. No credit pull, no obligation.
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. experian.com: What Is a Draw Period on a HELOC
2. Scotsman Guide – Get Your Client in the Front Door
3. CFPB: What Is a Home Equity Line of Credit HELOC
4. NerdWallet – HELOC on an investment property
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a Bank Statement HELOC Works for Landlords Weighing Draw Terms · How a Bank Statement HELOC Works as a Co-Owner Who Is on the Deed · How a Bank Statement HELOC Works for a Lock-in Homeowner
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
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.