The Quick Read: On a rental that still has a mortgage, the line is a second lien, and the most it can reach is 70% combined loan-to-value (CLTV) at a 720 credit score or better, minus your first mortgage balance, on lines from $50,000 up to $500,000, subject to underwriting. The rent must also cover a stress payment on the whole line, at a coverage ratio of at least 1.10x. Both tests apply, and the smaller result sets your limit.
- Formula: value × 70% CLTV, minus the first mortgage balance, capped at $500,000.
- Score: 720 or better. Below 720 there is no second-lien tier.
- Rent test: at least 1.10x, measured against the full credit limit, not the drawn balance.
- Draw at closing: at least 80% of the line, and never less than $50,000.
- Footprint: offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
Everything here is a ceiling or floor from select programs, not an offer. Each file is underwritten on its own.
What Is a DSCR HELOC on a Rental You Still Have a Mortgage On?
A DSCR HELOC is a revolving line of credit secured by a rental you keep. On a mortgaged rental, it sits behind your first mortgage as a standalone second lien. Your first loan stays untouched, so you reprice only the new money.
A HELOC works in two phases. You borrow during a draw period, then repay. This program uses a 5-year interest-only draw on the drawn balance, then a 25-year fully amortizing repayment period, for a 30-year maturity. The rate is variable.
The rental itself qualifies the line. The file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. There is no personal income calculation: no traditional personal-income documentation, W-2s, pay stubs or debt-to-income ratio. Your LLC can stay on title, with the members signing as guarantors, subject to program terms.
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.
How Is the Maximum Line Calculated?
Your maximum line equals the property’s value times the CLTV ceiling, minus every lien already on it, then trimmed to the program’s dollar limits. Value comes from the valuation, not your purchase price. A low valuation shrinks the line dollar for dollar.
CLTV adds up all loans secured by the property and divides by value. Wall Street Prep gives the same formula: total secured loan balance divided by appraised value. Here the combined total is your first mortgage plus the new line.
The steps run in this order:
1. Take the property’s current value. 2. Multiply by 70%, the second-lien ceiling at 720 or better. 3. Subtract the first mortgage balance. 4. Cap the result at $500,000. 5. Check it against the $50,000 minimum line. 6. Run the rent test on the whole line.
Equity is not the same as borrowing power. The ceiling stops at 70% of value, so you never reach all of your equity.
| First mortgage vs. value | Room under 70% CLTV | Result |
|---|---|---|
| About 50% of value | About 20% of value | Often workable on mid-to-higher values |
| About 65% of value | About 5% of value | Usually under the $50,000 minimum |
| 70% of value or more | None | No second-lien line |
On a rental worth well into six figures, a first mortgage near half the value leaves a usable line. A first mortgage near two-thirds leaves a sliver. Once that sliver falls below $50,000, no line fits.
Does Your Credit Score Change the Number?
On a second lien, your score decides whether you qualify at all, not how far you can go. The tier starts at 720, and 70% CLTV applies at 720 and above. A 780 does not unlock more leverage than a 720.
A score under 720 is the real obstacle for a 700 to 719 borrower with a first mortgage, since no second-lien tier exists there. First-lien tiers do not help, because a first lien exists only on a rental with no mortgage.
Mortgage history matters too. The program looks for 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 and no cash to close are required, subject to underwriting.
When Does the Rent Test Cut Your Line Down?
The rent test can shrink the line even when equity looks generous. The minimum is 1.10x. That is gross monthly rent divided by a fully amortizing payment on the entire credit limit, calculated at a stress rate two percentage points above the start rate.
Two points matter most here. First, the test runs on the full limit, so an undrawn balance still counts against you. Second, taxes and insurance are not part of that 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. A two-to-four-unit rental can have at most one vacant unit.
The lender’s own calculation governs.
A rental with modest rent and a large requested line can fail at 1.10x while passing the CLTV test. The fix is a smaller line. Ask for less, and the stress payment falls with it.
What Changes the Limit Beyond Equity and Rent?
Several program rules can trim or block a line.
Valuation path. Lines up 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. Lines above $400,000 need a full interior appraisal. Appraisal waivers are not accepted. NerdWallet notes that investment-property lenders may require more than one appraisal, so valuation is a real variable.
Declining market flag. A declining-market designation lowers the ceiling by 5 points. Philadelphia lines carry a ceiling 10 points lower.
Exposure. Each borrower is limited to 5 loans or $2,500,000 with the program.
Property type. Single-family, PUD, two-to-four units and condominiums are eligible. Rural-designated property, row homes, condotels, leaseholds, land trusts and mixed-use are not. A property listed for sale in the prior 2 months is out.
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).
One more point catches investors. The line must sit on a rental you already own. The equity in rental A cannot support a line on rental B, and the line cannot sit on the property you are about to buy.
How Much of the Line Must You Draw at Closing?
At least 80% of the line, and never less than $50,000. On the smallest lines, that means the whole line is drawn at closing. This is not a standby line you open and leave idle. Later draws must be at least $5,000 each.
That draw size matters for the rent test, which already counts the full limit. It also sets your interest-only balance from day one.
Plan for the end of the interest-only period. As the CFPB explains, payments are often much higher once repayment begins. The payment steps up when the 25-year repayment period starts. Because the rate is variable, the payment can also move. The rate and the pricing terms come with the lender’s disclosures.
Key Terms Defined
CLTV (combined loan-to-value): your first mortgage balance plus the new line, divided by the property’s value.
Second lien: a loan that sits behind the first mortgage in repayment order, secured by the same property.
DSCR (debt service coverage ratio): gross monthly rent divided by the qualifying payment. Here the minimum is 1.10x.
Draw period: the 5-year stretch when you can borrow from the line and pay interest only on the drawn balance.
Seasoning: the waiting period after a purchase or refinance before a lender will lend against the property.
Which Route Fits Your Rental?
The line is a tool for reaching equity without disturbing a first mortgage you like. It is not always the right tool.
| Option | Best when | Tradeoff |
|---|---|---|
| DSCR HELOC (second lien) | You want to keep your first mortgage | Tighter 70% CLTV ceiling |
| DSCR HELOC (first lien) | The rental has no mortgage | Reaches 75% LTV only at 740 or better |
| DSCR cash-out refinance | Equity is thin behind a first loan | Replaces your whole first mortgage |
| Smaller line on a different rental | One property cannot reach your number | More than one file to manage |
If your first mortgage already uses most of the allowed 70%, the line is small or zero. In that case, a cash-out refinance of the whole balance may deliver more, though it reprices everything. Lendmire’s complete DSCR loans guide covers how those programs compare.
If your rental has no mortgage, the first-lien version changes the math. At 740 or better, the ceiling is 75% LTV on lines up to $500,000. At 700 to 739, it is 70% LTV. Lines above $500,000, up to $1,000,000, carry a 65% LTV ceiling at 720 or better. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Not every investor wants a rental-qualified line. If you prefer to document income through deposits, Lendmire’s piece How Much Can You Borrow on a Bank Statement HELOC for a Mortgaged Rental? covers that route, which qualifies the borrower rather than the rent.
What Happens to the Money and the Risk?
The rental secures the line. The CFPB’s HELOC booklet warns that missed payments can put the secured property at risk. With a first mortgage ahead of the line, a default on either one can trigger trouble on the other.
Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
Before applying, gather the first mortgage statement, the current lease, rent receipts if the lease is above market, and any LLC papers. Check your first mortgage documents too. If the first loan is itself a DSCR loan, confirm that it permits a junior lien.
Frequently Asked Questions
Can I use equity in one rental to fund a line on another?
No. The line is secured by one property, and the equity in that same property supports it. If a single rental cannot reach your number, a smaller line on another already-owned rental is a separate file with its own valuation and rent test.
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). A listing for sale in the prior 2 months also blocks the file.
Can my LLC hold title?
Yes, on this program, 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. Borrowers on the line need not match those on the first mortgage.
Why is my line smaller than my equity suggests?
Because the ceiling is 70% of value, not 100%, and your first mortgage uses part of it first. The 1.10x rent test on the whole line can also cut the amount. A declining-market flag removes another 5 points from the ceiling.
Are foreign nationals eligible?
No. The program is open to U.S. citizens, permanent residents and non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible on this program.
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. Lendmire is a broker, not a lender, and every outcome is subject to lender guidelines and underwriting.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving landlords and real estate investors in 16 licensed states. DSCR home equity lines of credit on non-owner-occupied one-to-four-unit rentals are arranged through wholesale lending channels in 15 of those states (every licensed state except Tennessee); Lendmire brokers the line and the lender underwrites each application on the property’s rent, credit and leverage. 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. HELOC
2. Wall Street Prep – Combined loan-to-value
3. NerdWallet – HELOC on 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: Can You Get a DSCR HELOC on a Rental Held in a Revocable Trust? · How to Get a DSCR HELOC on a Rental You Keep After a Split With Your Partner · Will a Past Foreclosure Block a DSCR HELOC on Your Rental?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.