The Quick Read: The network’s DSCR home equity product is a variable-rate line, not a fixed closed-end second, so a fixed-rate lump sum is not what this program offers. The line is sized by combined loan-to-value: on a second lien, the first mortgage balance plus the new line can reach 70% of the property’s value at a 720 credit score or better, on lines of $50,000 to $500,000, subject to underwriting. Rent has to cover a stress payment on the whole line, so coverage can cap the amount before leverage does. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
- Second-lien ceiling: 70% CLTV at 720 or better, lines to $500,000.
- Your borrowing room is the CLTV ceiling times value, minus the first mortgage balance.
- Coverage minimum is 1.10x, tested on a payment for the entire credit limit.
- The rate is variable, and at least 80% of the line is drawn at closing.
- Available in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
What Does “DSCR HELOC as a Closed-End Second” Actually Mean?
The phrase mixes two products. A closed-end second pays out once, carries a fixed schedule and cannot be redrawn. A line of credit lets you borrow against equity in stages. The federal consumer-finance regulator describes a HELOC as open-end credit you can borrow against repeatedly, with equity defined as value minus the mortgage balance.
“DSCR HELOC” is a search phrase more than a standard product. Different lenders use it for a cash-out refinance, a fixed second or a true line. Before comparing amounts, ask three things: what lien position it takes, whether the rate is fixed or variable, and whether funds can be redrawn.
Across the wholesale network Lendmire works through, the DSCR line is a standalone second lien behind the first mortgage you keep, or a standalone first lien on a paid-off rental. It carries a variable rate. If a fixed rate and a single lump sum are non-negotiable, this is the wrong lane, and the honest answer is that availability for a fixed closed-end second is thin and set lender by lender. Lendmire’s piece Can You Get an Investment Property HELOC as a Closed-End Second With a Fixed Rate? covers that structure from the personal-income side.
The Sizing Formula
Maximum borrowing equals the CLTV ceiling times the property’s value, minus what you owe on the first mortgage. The federal consumer-finance regulator’s HELOC booklet shows the same arithmetic: lenders take a percentage of appraised value and subtract the existing balance.
Here is how it plays out on this program. Second-lien leverage tops out at 70% CLTV for borrowers at 720 or better, on lines up to $500,000. There is no second-lien tier below 720. Run three scenarios on a rental valued at $400,000, using modeled assumptions, not program offers:
| First mortgage balance | Room under 70% CLTV | Outcome |
|---|---|---|
| 40% of value | 30% of value | Line of $120,000 possible |
| 55% of value | 15% of value | Line of $60,000 possible |
| 68% of value | 2% of value | Below the $50,000 minimum |
The pattern matters more than the dollars. As the first loan grows, borrowing power shrinks fast. A 68% first mortgage leaves too little room for even the smallest line. Those results are ceilings under the leverage test only, before coverage and credit review. A declining-market flag lowers the ceiling by 5 points.
Two other numbers shape the result. Lines to $400,000 may use an automated valuation with a property inspection report; larger lines take a full interior appraisal. Appraisal waivers are not accepted. Value is current market value, not purchase price or projected after-repair value.
Why Coverage Can Cap You Below the Leverage Limit
The minimum DSCR is 1.10x, which is gross monthly rent divided by the qualifying payment. That payment is a fully amortizing payment on the entire credit limit at the start rate plus 2 percentage points. It is a stress test, and it counts principal and interest only, not taxes or insurance. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Notice the phrase “entire credit limit.” Even if you plan to draw less later, the test runs on the full line. At least 80% of the line is drawn at closing anyway, so the whole line is the right mental model.
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, and a two-to-four-unit property can have at most one vacant unit.
Say a rental clears the leverage test with room for a large line, but rent only covers the stress payment at about 0.95x. The line size has to come down until coverage reaches 1.10x. For lower-rent properties, coverage often binds before leverage does. Whether the first-mortgage payment joins the qualifying payment on a second lien is not something to assume, so confirm on the file how the lender treats it. The lender’s own calculation governs, and everything here is illustrative.
The First-Lien Gate
A second lien only works if the first mortgage allows one. Title, the first mortgage’s terms and the valuation all have to permit a subordinate lien. A third lien is not available, and an open construction loan or similar interim debt can block the structure.
The line is also not a purchase product. It is never closed together with a purchase. Seasoning has two 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).
Second Lien or First Lien: What Changes the Ceiling
If the rental has no mortgage, a first lien becomes possible, and the ceilings differ.
| Factor | Second lien | First lien |
|---|---|---|
| Leverage | Up to 70% CLTV | Up to 75% LTV |
| Credit score | 720 or better | 740+ for 75%; 700-739 for 70% |
| Line range | $50,000 to $500,000 | To $1,000,000 |
| Larger lines | Not offered above $500,000 | 65% LTV above $500,000 at 720+ |
A borrower with a first mortgage can only take a second lien. If your credit sits between 700 and 719, the second-lien tier is out of reach, but the real obstacle is the 720 floor on seconds, not the lien position.
Fixed Lump Sum or Variable Line: The Investor Decision
A fixed closed-end second suits a known, one-time need, like a down payment on the next property or a defined renovation. The CFPB notes that borrowers typically receive all the money up front and repay in regular monthly payments, and tells them to weigh the second’s rate against their current mortgage.
The variable line fits a different investor. It offers a 5-year interest-only draw period on the drawn balance, then a 25-year repayment period, with a 30-year maturity. Later draws run at least $5,000. The payment moves with the rate, though, so predictability is lower.
Here is the tradeoff. If you need certainty and one lump sum, a fixed second or a cash-out refinance may suit you better, though a cash-out replaces your first mortgage, which matters if that first loan is cheap. If you want to keep a low-rate first mortgage and fund in stages across a few years, the line may fit.
Be honest about the cash-flow pressure, too. Any second lien adds debt to the property, and interest-only draws turn into full payments after five years. Thin-margin rentals deserve a stress test beyond the program minimum, with vacancy, taxes and insurance in the picture.
What the File Needs
Qualification runs on the rental’s income: no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. The rent, lease, credit report and valuation are all documented. Other program points, subject to underwriting:
- Credit: 720 minimum on a second lien, 700 on a first lien. No 30-day mortgage late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
- No reserves or cash to close required.
- Up to 5 loans or $2,500,000 per borrower with the program.
- Vesting in your LLC is allowed, subject to program terms, with members signing as guarantors.
- Eligible: single-family, PUD, townhome, two-to-four units and condominiums. Not eligible: rural property, row homes, condotels, leaseholds and a few others.
- Foreign nationals and ITIN borrowers are not eligible.
Spending matters too. 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. The intended use of the proceeds, not a checked box, drives business purpose, so personal spending is the risky case. Tax treatment varies; consult a qualified professional.
For the full framework behind these programs, see Lendmire’s complete DSCR loans guide.
Key Terms Defined
Closed-end second: a second-lien loan paid out in one lump sum and repaid on a set schedule, with no redraws.
Combined loan-to-value (CLTV): the first mortgage balance plus the new loan, divided by the property’s value.
DSCR: gross monthly rent divided by the qualifying payment, with 1.10x the minimum on this line.
Second lien: a loan recorded behind the first mortgage, which stays in place.
Frequently Asked Questions
Can this program give me a fixed rate?
No. The line carries a variable rate, so a fixed rate with a single lump sum is a different product. If certainty matters most, ask any lender to confirm lien position, rate type and redraw rights in writing before comparing amounts.
What is the most I can borrow on a second lien?
The ceiling is 70% CLTV at a 720 score or better, on lines up to $500,000, less your first mortgage balance. Coverage of at least 1.10x on the full line and the minimum $50,000 line size can both lower the real number, subject to underwriting.
Does the first mortgage have to be paid off?
No. A second lien sits behind the first mortgage you keep. A first lien exists only on a rental with no mortgage, and the first lender’s loan terms must allow a subordinate lien.
How soon after buying a rental can I open the line?
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 the property?
Yes, 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.
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.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) arranging DSCR home equity lines of credit — standalone first or second liens on non-owner-occupied one-to-four-unit rentals, qualified on rent — through a wholesale lending network in 15 of its 16 licensed states (every licensed state except Tennessee). Eligibility is determined by the lender on each file. 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. CFPB
2. CFPB – What you should know about HELOCs (booklet)
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can You Borrow on a DSCR HELOC for Investing in Mortgage Notes? · How Much Can You Borrow on a DSCR HELOC After a First Mortgage Modification? · How Much Can You Borrow on a DSCR HELOC for a Mortgaged Rental With a Fixed First?
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.