The Quick Read: It depends mostly on how big your first mortgage balance is, because the line is sized as 70% of the rental’s value minus that balance, up to a $500,000 ceiling, and the final amount varies by scenario and is subject to underwriting. The interest rate on your first mortgage never enters the sizing, only the balance does. On the program Lendmire places, the main points are:
- The formula: value times 70% combined loan-to-value (CLTV), minus the first mortgage balance, on a second lien at a 720 credit score or better.
- The size range: lines run from $50,000 to $500,000, and the cap does not rise with a higher score.
- The delisting gate: a rental listed for sale in the prior 2 months is not eligible, and a withdrawn listing can still count.
- The coverage test: rent must cover a stress payment on the entire line at a minimum DSCR of 1.10x. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Everything here is a ceiling or a floor, not an offer, and each file is underwritten on its own facts.
How the Borrowing Formula Works
The line equals 70% of the property’s value, less what you still owe on the first mortgage. The first mortgage stays in place and its payment does not change, so the new line only adds new money on top of it. This is a standalone second lien, written behind the first mortgage you keep.
Combined loan-to-value means the first balance plus the full line, divided by value. The lender tests that number on the full limit, not on the amount you plan to draw. A line you draw only part of still counts at full size.
Here is how much room different first-mortgage sizes leave under the 70% cap:
| First mortgage as % of value | Room left under 70% CLTV |
|---|---|
| 40% | About 30 points of value |
| 50% | About 20 points of value |
| 60% | About 10 points of value |
| 70% or more | None |
Take a rental whose first mortgage is 40% of its value. The program allows a combined 70%, so the line can run up to about 30% of value. The $500,000 ceiling, the 1.10x coverage test, and the valuation can all pull that number lower.
A thin cushion can also hide a problem. The line must be at least $50,000, so a 10-point cushion only works on a higher-value rental.
A Low First Mortgage Helps Twice
A low first mortgage helps you in two ways. It is cheap to keep, because the balance and payment stay as they are. It also leaves room under the combined-leverage cap, because only the balance counts.
That is why the first mortgage’s rate does not matter to sizing. An investor with a very low rate and a large balance gets less room than an investor with a higher rate and a small balance. The size of the balance is the lever, and the rate is not.
Score works the same way on a second lien. A 740 score does not reach higher leverage than a 720 score, because both land at the same 70% CLTV cap. Below 720 there is no second-lien option in this program.
What Delisting Does to Eligibility
A property listed for sale in the prior 2 months is not eligible. Pulling a listing and applying the next day does not reset anything. The look-back runs from the withdrawal date, so a withdrawn listing can still trip it.
A line taken before you list is clean. After you delist, you can wait out the look-back, or you can move to a different structure such as a cash-out refinance. Cash-out programs set their own waiting periods after a delisting, so ask before you apply. Pulling a listing to get a line and then relisting is a red flag for any lender.
The delisting rule is separate from 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). A lease must also be in place.
How the Coverage Test Limits the Line
The rent qualifies the line, and the owner’s personal income is never calculated. The program requires a minimum DSCR of 1.10x. That is gross monthly rent divided by a qualifying payment, which is a fully amortizing payment on the entire credit limit at the start rate plus 2 percentage points. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Two details change the outcome:
- The full limit is tested. A line sized at the maximum has to be covered at full size, even if you draw less.
- The stress payment is higher than a normal payment. It is built on a stress rate, so a line can pass the leverage test and still shrink on coverage.
Rent used for lender review is the lesser of the appraisal’s market rent and the lease, unless three months of receipts support a lease above market. The qualifying payment is principal and interest on the full line. Taxes and insurance are not part of it. A two-to-four-unit property may have at most one vacant unit.
Confirm on the file how the lender treats the first-mortgage payment in the second-lien calculation. The lender’s own coverage calculation governs, and the DSCR is subject to lender guidelines.
Why Your Line May Be Smaller Than Your Equity
Several limits can cut a line below what the equity alone would suggest. Each one works independently of the others.
- The 70% ceiling. A first mortgage at 70% of value or more leaves no room.
- The $500,000 cap. A very valuable rental with a tiny first mortgage still stops at $500,000.
- A declining-market flag. This lowers the ceiling by 5 points.
- The coverage test. Rent that is too low for the full-limit stress payment shrinks the line.
- Valuation. The value comes from an automated valuation with a property inspection report on lines up to $400,000, or a full interior appraisal. Lines above $400,000 take a full interior appraisal.
Equity also does not pool. Each line is secured by one property and sized on that property’s equity, so strong equity in one rental does not lift a weaker one.
Mechanics Worth Checking Before You Apply
The first mortgage’s documents must allow a junior lien. If the first mortgage is itself a DSCR loan, its documents must allow it too. Check this before anything else, because a first lien that forbids a second can end the plan.
The rest of the file is short. You need a current first-mortgage statement, an insurance declaration, the vesting deed, and the lease. A second lien above $400,000 needs a full title policy. A smaller second lien uses an owner-and-encumbrance report.
Credit requires a 720 minimum on a second lien. The program wants no 30-day mortgage late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale, or deed-in-lieu. There are no reserves, no cash to close, and no debt-to-income test, subject to underwriting. A borrower can have at most 5 loans or $2,500,000 with the program.
The property must be non-owner-occupied, one to four units. Rural-designated property, condotels, row homes, and leaseholds are outside the program. The line can sit in your LLC on an investment property, with the members signing as guarantors, subject to lender program requirements.
The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Lendmire’s complete DSCR loans guide explains the broader rent-based approach this line borrows from.
How the Line Behaves After Closing
At least 80% of the line is drawn at closing, and the closing draw is never less than $50,000. Later draws are at least $5,000 each. The rate is variable.
The draw period is 5 years of interest-only payments on the drawn balance. A 25-year fully amortizing repayment period follows, for a 30-year total term. Payments will step up when repayment begins and can move with a variable rate, so plan for the higher repayment period at the start.
A line also is not guaranteed to stay open at full size. As the CFPB’s HELOC brochure explains, lenders generally can freeze or reduce a line if the home’s value falls. A line is also paid off if you sell. It does not transfer to your next deal.
After a delisting, the exit plan matters. At a combined 70%, closing and selling costs come out of the remaining 30%, so the sale margin gets thin if values slip.
When a Cash-Out Refinance Makes More Sense
Keeping the first mortgage does not always beat replacing it. A wide gap between your current first mortgage and today’s pricing, plus a modest cash need, favors the line. A different set of facts favors a cash-out refinance:
- You need more than $500,000.
- Your first balance is high enough to leave little or no room.
- The first mortgage’s documents refuse a junior lien.
A rental with no mortgage can take a first-lien line instead. The loan-to-value on a first lien is up to 75% at 740 or better, and 70% from 700 to 739, on lines to $500,000. Lines above $500,000, to $1,000,000, carry a 65% LTV ceiling at 720 or better. Lendmire’s requirements for a rental HELOC after delisting walks through the documents in order. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Bank HELOCs on rentals follow different rules. NerdWallet reports that not all lenders offer them, that requirements are strict, and that you cannot borrow as much as against a primary home. On Lendmire’s network the second-lien figure is a combined 70%.
Key Terms Defined
DSCR: the debt-service coverage ratio, meaning the property’s monthly rent divided by the qualifying payment.
CLTV: combined loan-to-value, which is the first mortgage balance plus the new line, divided by the property’s value.
Second lien: a loan recorded behind the first mortgage, so the first lender is paid first if the property is sold or foreclosed.
Junior lien: another name for a lien that ranks behind the first mortgage.
Stress payment: a fully amortizing payment on the entire line at the start rate plus 2 percentage points, used only to test coverage.
Frequently Asked Questions
Does my low first-mortgage rate raise how much I can borrow?
No. Only the first mortgage’s balance counts against the line, never its rate. A lower balance gives more room under the 70% combined cap, which is the whole benefit.
Does a higher credit score raise the line?
Not on a second lien. A score of 720 or better reaches 70% CLTV, and a higher score reaches the same cap. A score below 720 has no second-lien option in this program. Qualification remains subject to underwriting.
What are the seasoning rules on a rental I just delisted?
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). The delisting look-back is a separate test. A listing in the prior 2 months makes the property ineligible.
Can I take the line in my LLC?
Yes, on investment property, with the members signing as guarantors, subject to lender program requirements. A title holder who is not a borrower signs a non-borrowing owner acknowledgment. The borrowers on the line do not have to match the borrowers on the first mortgage.
Is this the same as a bank HELOC on a rental?
No. The rent qualifies this line, and your personal income file is not calculated. The CFPB also says lenders must give HELOC applicants its HELOC brochure.
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. Reach the team at 828-256-2183 or request a quote through Lendmire’s quote form. Lendmire is a broker that arranges the line through a wholesale lender, and all terms are subject to underwriting and are not a commitment to lend.
For current guidelines and terms, see Lendmire’s DSCR HELOC programs page.
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
2. NerdWallet
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 on a Vacant Rental Without a Lease? · 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
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- 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.