The Quick Read: A DSCR HELOC is a revolving line of credit on a rental you keep, and it qualifies primarily on the rent covering a stress payment on the whole line, subject to lender guidelines. The line sits behind your existing first mortgage as a second lien, or stands alone as a first lien on a paid-off rental. It does not turn on your personal income. The same rules apply to a Savannah landlord as to any owner in the program’s footprint.
- Coverage: rent must reach at least 1.10x a fully amortizing payment on the entire credit limit, not only the drawn amount.
- Leverage: second liens reach up to 70% CLTV on an investment property at a 720 score or better. First liens reach up to 75% LTV on an investment property at 740 or better.
- File: a lease in place, an automated valuation or full appraisal, six months of seasoning, and an eligible 1-4 unit property.
- Structure: a 5-year interest-only draw period, a 25-year repayment period, and a variable rate. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
All figures are ceilings and floors available through select programs, subject to underwriting. They are not offers.
What a DSCR HELOC Actually Is
A DSCR HELOC is a home equity line of credit on a non-owner-occupied one-to-four-unit rental, qualified on the property’s rent instead of the owner’s income. It is a business-purpose product for investors. It is not the home equity line you might open on the house you live in.
The line is written one of two ways. It can be a standalone second lien behind the first mortgage you keep. Or it can be a standalone first lien on a rental with no mortgage at all. It is never closed together with a purchase, and it is never a third lien. It is also never a line on your own home or a second home.
The borrowers on the line do not have to be the borrowers on the first mortgage. Your LLC can hold title, subject to program terms. Members then sign as guarantors.
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.
Here is the label problem. The phrase DSCR HELOC gets used loosely. Some products sold under that name are really closed-end second mortgages that pay out one fixed amount. Others are bank-style rental HELOCs that verify your personal income. A true DSCR line is revolving, uses rent as the qualifier, and has the draw rules covered below.
The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. That list includes Georgia. Lendmire is a broker. It places these files through a wholesale lender in its network, and the lender underwrites and approves.
Key Terms Defined
DSCR (debt service coverage ratio): gross monthly rent divided by the qualifying payment. Above 1.00 means rent exceeds that payment.
CLTV (combined loan-to-value): your first mortgage balance plus the new line, divided by the property’s value. It applies to second liens.
LTV (loan-to-value): the loan divided by value when the line is the only lien. It applies to first liens.
Lien position: your place in line for repayment if the property is sold. A first lien is paid before a second lien.
Draw period: the stretch when you can borrow from the line. Repayment follows it.
Seasoning: the waiting period a lender wants after a purchase or refinance before it will lend again.
How the Coverage Test Works
The test compares rent to a stress payment on your entire credit limit. The qualifying payment is principal and interest on the full line, fully amortizing, at the start rate plus 2 percentage points. Taxes and insurance are not part of that payment. The minimum coverage is 1.10x.
Rent used for lender review follows one rule. Rent is the lesser of the appraisal’s market rent (Form 1007) and the lease, unless three months of receipts support a lease above market. A signed lease must be in place. On a two-to-four-unit building, at most one unit can be vacant.
The full-limit part catches many landlords off guard. Interest-only payments during the draw period are lower than the qualifying payment. The lender does not test that lower number. It tests a payment that pays the whole line off over the long run. It also tests the whole line, even if you only draw part of it.
Run the numbers this way, using modeled ratios only. Say a rental’s rent covers the stress payment on a given line at 1.25x. That clears 1.10x. Ask for a line twice as large on the same property. The stress payment roughly doubles, and coverage drops to about 0.6x. The size of the line you request drives the test as much as the rent does.
On a second lien, the lender’s own coverage calculation governs how the first mortgage payment counts. Confirm on the file how the lender treats that payment before you plan around a number. The lender’s calculation always overrides any illustration here.
Requirements at a Glance
Here is the whole file in one view. Each row shows what the lender reviews and where files commonly break.
| Requirement | What the lender reviews | Where files break |
|---|---|---|
| Coverage | Rent vs. stress payment, full line | Line sized too big for the rent |
| Second-lien leverage | CLTV up to 70% at 720+ | First mortgage already uses the equity |
| First-lien leverage | LTV up to 75% at 740+ | Score between 700 and 739 lowers the cap |
| Credit | Lender’s own credit report | Score just under a tier |
| Mortgage history | No 30-day late in 12 months | One recent late payment |
| Property | Eligible 1-4 unit rental | Row home, condotel, rural |
| Lease | Signed lease in place | Vacant or month-to-month gap |
| Valuation | Automated valuation or appraisal | Low confidence score |
Reserves and cash to close are not required. Each borrower is limited to 5 loans or $2,500,000 with the program. Every figure is subject to underwriting and lender guidelines.
Step by Step: How Underwriting Treats the File
1. Pick the collateral. It must be an eligible rental you intend to keep. The line cannot close with a purchase.
2. Establish rent. The lender reads the lease and orders a market-rent schedule with the valuation.
3. Run the stress payment. The lender sizes it on the full requested limit and compares rent to it.
4. Check combined leverage. On a second lien, the lender adds your first-mortgage balance to the new line and divides by value.
5. Review credit and history. The lender checks the score tier, recent mortgage lates, and any bankruptcy, foreclosure, short sale or deed-in-lieu.
6. Order the valuation and title. The path depends on line size, covered below.
7. Confirm entity and insurance. The program reviews LLC documents if the property is vested in one. Hazard insurance must cover both liens, with flood coverage where required.
8. Close and draw. At least 80% of the line is drawn at closing.
Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines. The file still contains credit, valuation, title, insurance and entity documents. It simply has no traditional personal-income documentation, W-2s, pay stubs or personal income calculation.
How Much Equity Can You Reach?
The answer is the lower of two limits: the leverage cap and the coverage test. Equity alone does not size the line.
On a second lien, combined leverage is the cap. The first mortgage balance plus the new line can reach up to 70% CLTV on an investment property. That requires a 720 score or better, on lines up to $500,000. Below 720, this lane has no second-lien option. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
Picture a rental with a first mortgage equal to 50% of its value. A second-lien line could then reach up to 20% of value, assuming the 70% CLTV cap, 720 credit and enough rent coverage. Lines start at $50,000, so a rental with thin equity may not support one.
On a first lien, the rental has no mortgage. The cap is LTV on an investment property:
- 740 or better: up to 75% LTV on lines to $500,000.
- 700 to 739: up to 70% LTV on lines to $500,000.
- Lines above $500,000, up to $1,000,000: 65% LTV at 720 or better. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The first-lien floor is a 700 score. If you keep a first mortgage, only the second lien applies to you, and that carries the 720 floor. A declining-market flag on the property can lower the ceiling by 5 points. Because the lender tests the whole limit, a smaller line often clears coverage when a larger one would not.
What Property Qualifies
Eligible property includes single-family homes, PUDs, townhomes, two-to-four-unit buildings, and warrantable and non-warrantable condominiums. Lots up to 10 acres also qualify. The leverage tiers above apply to every property type.
Several property types are outside this lane:
- Rural-designated property
- Row homes and condotels
- Commercial, agricultural and mixed-use property
- Leaseholds and land trusts
- Age-restricted communities and hobby farms
- Modular and log homes, and land-contract properties
- A property listed for sale in the prior 2 months
- A property with a solar lien
An older attached rental can fall under the row home exclusion depending on how it is classified. That is worth checking on a Savannah townhouse-style rental, or any attached property, before you plan around the line.
Borrowers must be U.S. citizens, permanent residents, or non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible on this program.
Seasoning: The Two Six-Month Clocks
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).
Plan equity pulls around this timing. If you just refinanced, a different tool may fit better while you wait.
Valuation, Title and the Entity
Lines up to $400,000 use an automated valuation with a confidence score of 85 or better, plus a property inspection report. A full interior appraisal is the alternative. Lines above $400,000 take a full interior appraisal on Form 1004, 1073 or 1025. Appraisal waivers are not accepted.
Title work scales the same way. A first lien and any second lien above $400,000 get a full title policy. A smaller second lien gets an owner-and-encumbrance report.
If your LLC holds title, the members sign as guarantors. A title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. Guarantors stay personally liable, so the LLC does not wall off the debt.
Many bank and credit-union rental HELOCs exclude LLC-titled property, which is one reason landlords look at this route. Entity eligibility still depends on the specific program and lender guidelines.
Draws, Repayment and the Variable-Rate Reality
The structure is a 5-year interest-only draw period on the drawn balance. A 25-year fully amortizing repayment period follows, for a 30-year maturity. The rate is variable.
The CFPB describes the general HELOC shape: an open-end line you can draw on repeatedly, with a draw period followed by repayment. This program adds its own rules. 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.
So this is not a standby reserve. Interest starts on a large balance on day one. Because the rate is variable, your carrying cost can move after closing, even though the qualifying test uses a stress payment. Landlords who count on cash flow should leave room for that movement.
Credit sets the tier. This program requires a 720 on a second lien and a 700 on a first lien, based on the lender’s own report. It also requires no 30-day mortgage late in the last 12 months. It requires 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
Where the General Rule Breaks
The line cannot buy the property it sits on. It never closes with a purchase. Landlords use it to fund the down payment on a later purchase, so the line has to exist before you go under contract. The new purchase loan is then judged mostly on the new property’s own rent.
Lien position changes the math. With a first mortgage in place, only a second lien is possible. A first-lien line exists only on a rental with no mortgage. Nearly paid-off does not count.
Short-term rentals are program-specific. Rent treatment varies. 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.
A bank-style rental HELOC is a different product. Bank programs of that kind typically verify personal income and apply a debt-to-income cap. Some limit portfolio size or require a relationship with your primary residence. If you are self-employed or hold several entities, that file can be harder to document.
A recent score drop or late payment can reset your tier. A single 30-day late in the last 12 months stops the file. A score just under 720 removes the second-lien option entirely.
HELOC or Cash-Out Refinance?
Choose the line when your current first mortgage is worth keeping. It stays in place. A DSCR cash-out refinance replaces it with one new loan. The CFPB draws the same line between the two product types: a revolving line you draw on, and a lump sum paid out once.
| Factor | DSCR HELOC | DSCR cash-out refinance |
|---|---|---|
| First mortgage | Stays in place | Replaced |
| Structure | Revolving line, draws | One lump sum |
| Coverage test | Stress payment, full limit | Tested on the new loan |
| Best when | First mortgage is worth keeping | Existing loan is worth replacing |
The decision comes down to three questions. Is your first mortgage worth keeping? Is the property titled personally or in an LLC? Do you want most of the money at closing or staged later? This program draws at least 80% at closing, so the staged-access advantage is smaller than the word revolving suggests. You can also use each tool on a different property.
Lendmire’s complete DSCR loans guide covers the wider DSCR toolkit.
Frequently Asked Questions
Does rent only have to cover what I draw?
No. The test runs on the full credit limit, using a stress payment, not on your drawn balance. A smaller requested line is the simplest fix when coverage runs thin.
Do I need cash reserves?
No reserves and no cash to close are required on this program, subject to underwriting. The file still needs a lease, credit, a valuation, title and insurance.
How long do I have to own the rental first?
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 the line buy my next rental outright?
Not directly. It cannot close with a purchase, so it works as a source for a down payment on a later deal. The new loan is judged mostly on the new property’s own rent.
Is a DSCR HELOC offered in Georgia?
Yes. Georgia is one of the 15 states in the program’s footprint, which is 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Tennessee owners need a different structure.
Next Steps
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. Every file is underwritten individually, and nothing here is a commitment to lend.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. It arranges DSCR home equity lines of credit on rental property through wholesale lending partners in 15 of its 16 licensed states (every licensed state except Tennessee); each line is written on a non-owner-occupied one-to-four-unit rental and reviewed individually by the lender under the program’s credit and leverage 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. The CFPB
2. The CFPB
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: DSCR HELOC Requirements With No Monthly Payment · Banks That Offer a DSCR HELOC for Landlords Planning a Rehab Draw · Banks That Offer a DSCR HELOC to Buy Investment Property Using Rental Equity
Guides: DSCR HELOC in Savannah, GA · DSCR HELOC in Georgia
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.