HELOC vs Home Equity Loan With a $700,000 to $1 Million Credit Line

The Quick Read: A HELOC is a revolving line you draw on, and a home equity loan pays out one lump sum on a fixed schedule. At this size the choice is often narrower than it looks, because the wholesale network Lendmire places files with caps what a single line can reach.

• Lines above $500,000 are primary-residence only. They need a 700 credit profile or better (720 on the longer-runway structure, explained below), a full appraisal, and a ceiling of 75% combined loan-to-value (CLTV, meaning all liens added up, divided by the home’s value).
• A line on an investment property tops out at $500,000, with a 70% CLTV ceiling and a 700 minimum score.
• A home equity loan fits a known, one-time cost. A HELOC fits a cost you will pay in stages.
• Neither product is a DSCR loan. Both qualify you personally, and neither lets an LLC hold title.

A HELOC suits a homeowner who wants access to equity in pieces, usually on a primary residence. A closed-end home equity loan suits someone who knows the exact amount and wants one fixed schedule. If your real goal is $1 million of rental-property capital, you are probably shopping for something else, and the verdict section says what.

Side-by-Side

The two products differ most in how money comes out and how it is repaid. The HELOC column below reflects the guidelines in the wholesale network Lendmire works with. The home equity loan column shows published industry norms, which vary by lender, so treat it as a typical picture.

Two rows deserve a second look. First, qualification: both products are personal-credit products, so your credit score, debt-to-income ratio (DTI) and equity decide the file. The network’s HELOC allows up to a 50% DTI, calculated on the interest-only payment at the maximum draw. Rental income is not the test. Second, vesting: if the property sits in an LLC, neither product works until the title changes.

Key Terms Defined

Draw period. The window when you can borrow from a HELOC, usually paying interest only. After it ends, you repay.

Repayment period. The years after the draw period when the balance amortizes, meaning each payment includes principal.

Lien position. Where your loan stands in line if the property is sold or foreclosed. A first lien gets paid before a second.

Vesting. How the property’s title is held: in your own name, in a trust, or in an entity such as an LLC.

Closed-end credit. A loan funded once, with a set repayment schedule. A home equity loan is closed-end. A HELOC is open-end, meaning you can borrow again as you repay.

When a HELOC Is the Better Fit

A HELOC is the better fit when you will spend the money in stages, or when you are not sure you will spend all of it. The CFPB’s HELOC booklet describes it as revolving credit secured by your home, with a limit set as a share of the home’s appraised value minus what you still owe on the existing mortgage. That formula is the whole game at this size.

Think of a renovation on a primary residence that will run in phases. Or a bridge that funds a down payment now and a rehab later. You draw as invoices arrive.

There is a catch, though. On the network’s programs, at least 75% of the line is drawn at closing. That means the “draw only what you need” appeal is partly gone on day one. You are carrying most of the balance from the start.

Other structural points matter on a large line:

• Two draw structures. The shorter-draw structure runs a 3-year interest-only draw and a 17-year repayment. The longer-runway structure runs a 5-year draw and a 25-year repayment. In Tennessee, the shorter-draw terms become 3 years and 12 years, and the longer-runway terms become 5 years and 10 years.
• No fixed conversion. The line adjusts across both the draw and repayment periods and never converts to fixed.
• Payment step-up. When the draw period ends, principal starts amortizing. On a six-figure balance, that is a real change in your monthly obligation, so plan for it before you sign.
• Later draws. After closing, the minimum subsequent draw is $1,000 (Texas is $4,000) under the longer-runway structure.
• Lender controls. The CFPB’s HELOC materials note that a lender can reduce a line if the home’s value falls. If you plan to rely on the line later, that matters more than the headline limit.

One more point for homeowners: a HELOC may sit in first or second lien position on the network. A standalone first-lien line is unusual, and it can make sense when there is no existing mortgage to protect.

When a Home Equity Loan Is the Better Fit

A home equity loan is the better fit when you know the number. One purchase, one payoff, one project with a firm bid. You receive the full amount at closing and repay it on a fixed schedule, so there is no draw period and no step-up later.

That predictability is the product. It also removes the temptation to keep drawing.

Picture a homeowner consolidating a single large debt, or funding a closing-date purchase with a known price. A lump sum matches the need exactly, and the repayment schedule never changes. Contrast that with a HELOC, where you hold available credit you may never use.

The tradeoffs run the other way too:

• You start repaying principal and interest right away, so cash flow tightens on day one.
• You cannot reborrow. If the project overruns, you need a second source of funds.
• At $700,000 to $1 million, closed-end second liens are a lender-by-lender matter. Industry norms at jumbo sizes usually include a full appraisal, tighter combined leverage, and more attention to liquidity. Expect a smaller field of lenders than at ordinary sizes.

What a $700,000 to $1 Million Ask Does to the Equity Math

The equity requirement is the hard part, not the product choice. Combined debt against the property, your first mortgage plus the new line or loan, cannot exceed the CLTV cap. So at a 75% cap on a primary residence, the home must be worth about 1.33 times your total debt after the new money goes on.

That is a big home with a small mortgage, or no mortgage at all. The CFPB booklet uses 75 percent as an example limit. On the network Lendmire places files with, the real ceilings depend on occupancy:

• Primary residence, line above $500,000: 75% CLTV, up to $750,000, with a 700 credit profile or better (720 on the longer-runway structure) and a full appraisal.
• Primary residence, line of $500,000 or less: ceilings run higher at stronger credit, reaching 90% CLTV only at a 720 score or better.
• Investment property: 70% CLTV, up to $500,000, with a 700 minimum score.

The 90% figure is not the story for a large line. It exists only for lines up to $500,000. A $700,000-plus line sits in the 75% tier.

Valuation also changes with size. Above $500,000, a full appraisal is required. Expect that appraisal to drive the number, because it sets the equity you can use.

Underwriting rules also differ by product. The eCFR text of Regulation Z carves out HELOCs from the federal ability-to-repay rules written for closed-end loans. That does not make a HELOC easy to get. Lenders apply their own credit, DTI and equity policies, and a large line gets the closest look.

Credit rules deserve a quick read. The network uses a single-bureau score keyed to the primary wage earner, and the report can be no more than 90 days old at closing. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure history splits between the network’s two programs. The longer-runway program seasons a foreclosure at 7 years and a deed-in-lieu, pre-foreclosure or short sale at 4, while the higher-leverage program declines the history regardless of age. Reserves vary by lender and loan size, and a line this large tends to draw more attention to liquidity.

Where Investors Hit the Wall

Investors hit the wall at title and at the $500,000 rental cap. A line on a rental property tops out at $500,000 on the network, so a $700,000 to $1 million investment-property HELOC does not exist there. Only a primary residence can carry a line above that, and only up to $750,000.

The vesting rule is the sharper edge. Title must be held by you personally, or by a revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind or land trusts cannot hold title. If your rental already sits in an LLC, you would need a vesting change first. Or you would look at a different product.

Property type matters too. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agricultural-zoned properties are not eligible for these lines. Non-warrantable condos are eligible. Also, a borrower with more than 15 financed properties is not eligible.

Availability is narrow as well. Lendmire places home equity lines in 16 full-service states, a smaller footprint than its DSCR lending in 41 markets, including Washington, D.C.

So what does an investor with a $1 million capital target actually do? The practical alternative is usually a DSCR cash-out refinance. DSCR stands for debt service coverage ratio, and these loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. The payment is measured as PITIA: principal, interest, taxes, insurance and association dues.

Across the network, cash-out refinances top out around 75% LTV on a standard rental. About 6 months of seasoning is the common expectation. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), with 30-year fixed structures generally required above $2,500,000. Credit starts at a 620 floor in parts of the network, most programs want about 660, and 700-plus unlocks the strongest leverage. Holding the loan in an LLC is possible, subject to lender program eligibility.

Clearing a DSCR test is not the same as positive cash flow. Repairs, vacancy, management and capex sit outside the calculation.

For the basics, see the complete DSCR loans guide. The tradeoff is real: a cash-out replaces your first mortgage rather than sitting behind it. Run the numbers for an existing low-cost first lien before deciding.

The Verdict

Choose a HELOC if you will spend the money in stages, the home is your primary residence, and your credit clears the tier you need. Choose a home equity loan if you know the exact amount and want one fixed schedule. Choose neither if the property sits in an LLC, or if you need more than the network’s maximum single line: $750,000 on a primary residence, or $500,000 on a second home or investment property.

This one is a genuine toss-up for many homeowners. The HELOC gives flexibility, but because at least 75% of the line is drawn at closing, that flexibility covers only the remainder, and the step-up after the draw period cuts into it further. If most of the money will go out right away, the loan’s certainty may serve you better. The loan gives certainty, but you pay on all of it from day one. The stronger play often depends on whether the cost is truly known.

For a rental owner, the question changes shape. Either equity product is judged on your personal credit, your debts and the equity in the property, and rental income is not the test. A DSCR cash-out is judged the other way, on whether the property’s rent covers its payment, with equity setting the leverage cap. Pick the product whose test your file actually passes.

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. The brokerage is reachable at 828-256-2183 or through its quote request page. For a rental-focused read, Lendmire’s article Can You Get an Investment Property HELOC With a $700,000 to $1 Million Credit Line? covers the investor angle.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, 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.

References

1. CFPB HELOC booklet

2. eCFR, 12 CFR Part 1026, Subpart E