The Quick Read: Not directly. On the DSCR HELOC Lendmire places, the line must be drawn at least 80% at closing, so a true no-minimum-draw standby line is not part of the program. How much you can borrow is set by combined leverage, the rent test on the whole line, and a $500,000 cap on most files, subject to underwriting.
- Second lien: up to 70% CLTV at a 720 score or better, lines from $50,000 to $500,000.
- First lien on a rental with no mortgage: up to 75% LTV at 740 or better, 70% from 700 to 739, and 65% on lines above $500,000 up to $1,000,000.
- Rent must cover a stress payment on the entire limit at 1.10x, not just the drawn balance.
- Availability varies by state, and each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The title asks for two protections: no minimum draw and no inactivity fee. Those are separate terms, and this program handles them differently. The sections below show how the maximum is built, where the closing draw changes the math, and when another structure fits better.
What Does “No Minimum Draw” Actually Mean?
It means the lender does not force you to borrow a set amount at closing or on each draw. No federal rule creates that protection. Each credit agreement sets its own terms, so the term has to be read in the file, not assumed from the product name.
The CFPB explains that some plans require a minimum amount each time you borrow, or a minimum amount kept outstanding, and others require an initial draw when the line opens. Bankrate adds that a minimum draw at closing means you start using the line right away and pay interest on those funds each month.
That second case is this program. Across the wholesale network, the DSCR HELOC requires at least 80% of the line to be 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. After that, each later draw is at least $5,000.
So the honest answer on “no minimum draw” is no. The line works more like a large, flexible loan with a small undrawn remainder than like a standby reserve. If you want a line you can open and leave untouched, this program is the wrong fit.
Is a “No Inactivity Fee” Term the Same Thing?
No. An inactivity fee is a charge for leaving the line unused. A closing draw requirement or a per-draw floor is a different term entirely. A line can have one without the other.
| Term | What it is | Covered by “no inactivity fee”? |
|---|---|---|
| Inactivity fee | Charge for not using the line | Yes |
| Minimum draw at closing | Required opening balance | No |
| Per-draw minimum | Smallest allowed later draw | No |
| Annual or maintenance fee | Recurring account charge | No |
| Per-draw transaction fee | Charge each time you borrow | No |
CBS News notes that lenders may impose inactivity fees when borrowers miss minimum withdrawals, and that those minimums are usually written into the contract. The fee schedule still matters. Ask for the full schedule in writing, and read it against the lender’s HELOC disclosures. The rate and the pricing terms come with those disclosures, not from a broker article.
How Is the Maximum Line Calculated?
The maximum is the lowest of four limits: the leverage cap on value less what you already owe, the line-size cap, the rent test, and the valuation path. Work them in order, and the smallest number wins.
1. Start with value. The lender’s valuation sets it, and a declining-market flag lowers the ceiling by 5 points.
2. Apply the leverage cap. On a second lien, multiply value by the CLTV cap. CLTV is your first mortgage balance plus the new line, divided by value. Subtract the first mortgage balance. What remains is the room.
3. Apply the line cap. Second-lien lines run to $500,000. First-lien lines run to $500,000 at the upper tiers and to $1,000,000 at 65% LTV. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
4. Run the rent test. Rent must cover the stress payment on the full limit at 1.10x or better.
A worked case in percentages and ratios, with no dollar conversion: a rental valued at a round number, a first mortgage already on it, a 720 score, and a 70% CLTV cap. The line can only fill the gap between what is owed and 70% of value. If the first mortgage already sits near 60% of value, the room is about 10 points of value, and the $50,000 line minimum may rule the file out. If the first mortgage sits near 40%, the room is about 30 points, and the rent test then decides how much of that room you can actually use.
On a rental with no mortgage, the same math runs from zero. At 740 or better the first-lien cap is 75% LTV. At 700 to 739 it is 70% LTV. Above $500,000 the cap falls to 65% LTV, at a 720 score or better. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Which Leverage Tier Applies to You?
Lien position and credit score decide the tier. A borrower who keeps a first mortgage can only take a second lien, with a 720 floor. A first lien exists only on a rental with no mortgage, with a 700 floor.
| Position | Credit score | Max leverage | Line size |
|---|---|---|---|
| Second lien | 720+ | 70% CLTV | $50,000–$500,000 |
| First lien | 740+ | 75% LTV | up to $500,000 |
| First lien | 700–739 | 70% LTV | up to $500,000 |
| First lien, large line | 720+ | 65% LTV | above $500,000 to $1,000,000 |
These are ceilings, not offers, and they apply through select programs, subject to underwriting. Below 720 on a second lien there is no tier at all. A 700 to 719 borrower with a first mortgage has no second-lien cell, so the real options are a different structure or a stronger score. Mortgage history matters too: no 30-day late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
Market surveys differ. NerdWallet reports that rental HELOCs are not offered by every lender and carry stricter requirements than primary-home lines, with many lenders sitting below 70% on investment property. The network figures above are the ones that govern this program.
How Does the Rent Test Cap the Line?
Rent qualifies the line, and the test runs on the entire credit limit, not on what you draw. A large undrawn limit still counts against coverage. That is why a bigger line is not always a better line.
The minimum is 1.10x. Gross monthly rent is divided by a fully amortizing payment on the whole limit, at the start rate plus 2 percentage points. That is a stress payment, and no rate is quoted here. Taxes and insurance are not part of the qualifying payment. 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 may have at most 1 vacant unit.
Confirm on the file how the lender treats the first-mortgage payment on a second lien. The lender’s own coverage calculation governs, and any example here is illustrative.
Think about an owner with strong equity and middling rent. The leverage cap might allow a very large line, but the stress payment on that full limit pushes coverage under 1.10x. The usable line then shrinks to whatever limit the rent supports. The fix is a smaller limit, not a larger draw.
Qualification here is on the rental’s income: no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. The lease, rent schedule, first-mortgage statement, entity documents, insurance, title and valuation are all documented.
What Does the File Look Like?
The file is lighter on personal documents and heavier on property documents. Reserves and cash to close are not required, which is a real difference from many bank products.
Valuation depends on line size. Lines to $400,000 use an automated valuation with a confidence score of 85 or better, plus a property inspection report, or a full interior appraisal. Larger lines take a full interior appraisal. Appraisal waivers are not accepted. A recent rehab can confuse an automated valuation, so a full appraisal is the cleaner path when the property has changed.
Title work differs by lien. A full title policy is required on a first lien and on second liens above $400,000. Smaller second liens use an owner-and-encumbrance report.
Seasoning is 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).
Entity files work if the LLC is documented. Vesting in the owner’s LLC is allowed on investment property, with members signing as guarantors. A title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. Exposure is capped at 5 loans or $2,500,000 per borrower with the program.
Property type limits matter. Single-family, PUD, townhome, two-to-four units, and warrantable and non-warrantable condominiums are eligible, plus lots to 10 acres. Rural-designated property, condotels, row homes, leaseholds, land trusts, age-restricted communities and mixed-use are outside the lane. So is a property listed for sale in the prior 2 months and one with a solar lien.
What Does the Draw Structure Cost You in Practice?
Interest runs on the drawn balance, and most of the line is drawn on day one. The draw period is 5 years interest-only, then a 25-year fully amortizing repayment period, for a 30-year maturity. The rate is variable.
The cost looks closer to a loan than to a reserve. Flexibility lives in the later draws, each at least $5,000, and in not having to refinance the first mortgage.
Think about the choice this way. If the first mortgage is worth keeping, a second lien leaves it alone and adds a line behind it. If the first mortgage is not worth keeping, a DSCR cash-out refinance replaces it and usually fits larger amounts better. Lendmire’s piece Can You Get an Investment Property HELOC With No Minimum Draw or Inactivity Fee? covers the credit-based side of that question, and the complete DSCR loans guide covers the broader loan family.
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.
When Should You Skip This Product?
Skip it when you want an idle reserve, when the first mortgage is the problem, or when your score sits below the tier you need. Skip it too when the property is on the excluded list.
- You want standby liquidity. The closing draw rules this out.
- You need to buy a property you do not own yet. The line cannot be opened as part of a purchase, so it must be placed on a rental you already hold.
- You hold a rental bought or refinanced recently. The seasoning clocks apply.
- You are a foreign national or ITIN borrower. These borrowers are not eligible. US citizens, permanent residents and non-permanent residents with a Social Security number are.
- The rental is your own home or a second home. This line is never offered on owner-occupied property.
Product names also cause confusion. The label DSCR HELOC gets applied to loans that are really closed-end seconds paying out one fixed amount, with no draw feature at all. Confirm the product is a revolving line with a draw period before comparing it.
Key Terms Defined
CLTV: Combined loan-to-value, the first mortgage balance plus the new line, divided by the property’s value.
Draw period: The 5-year interest-only stretch when you can borrow against the line.
Inactivity fee: A charge for not using the line, which is separate from any draw requirement.
Stress payment: The fully amortizing payment on the entire limit at the start rate plus 2 percentage points, used only to test coverage.
Minimum draw: The smallest amount you must borrow, either at closing or on each later draw.
Frequently Asked Questions
Can a DSCR HELOC ever have no minimum draw?
Not on the program Lendmire places. At least 80% of the line is drawn at closing, never less than $50,000, and later draws are at least $5,000. The CFPB notes that draw minimums are plan-specific, so other products may differ, and each agreement should be read for its own terms.
Does a no inactivity fee term remove the closing draw?
No. The two terms are independent. An inactivity fee charges for non-use, while a closing draw forces use. Ask for the full fee schedule, including annual, per-draw and maintenance charges, before you choose a line.
How much can I borrow on a second lien?
Up to 70% CLTV at a 720 score or better, on lines from $50,000 to $500,000, subject to underwriting. The line is the gap between 70% of value and your first mortgage balance, then limited by the 1.10x rent test on the full limit.
How long must I 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 my LLC hold title?
Yes, on investment property, 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.
Where is the program offered?
In 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Programs change, and every file is underwritten individually.
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. Lendmire is a mortgage broker and arranges financing through select lenders in its wholesale network; this is not a commitment to lend.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps landlords and real estate investors open DSCR home equity lines of credit on their rentals — lines qualified on the property’s rent, never on the owner’s own home — through wholesale lenders in 15 of Lendmire’s 16 licensed states (every licensed state except Tennessee). Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its guidelines. 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. The CFPB
2. Bankrate – HELOC closing costs and fees
3. CBS News – What happens if you take out a HELOC but don’t use it
4. NerdWallet – HELOC on an investment property
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 Refinancing a Balance Into a New HELOC? · How Much Can You Borrow on a DSCR HELOC Past Conventional Loan Limits? · How Much Can You Borrow on a DSCR HELOC on a Vacant Rental Without a Lease?
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.