The Quick Read: It depends on two tests, and the tighter one sets your line: on a Texas rental, a second-lien DSCR HELOC typically reaches 70% combined loan-to-value at a 720 credit score, in lines from $50,000 to $500,000, while the rent must also cover a stress payment on the whole line at 1.10x, subject to underwriting. Texas’ well-known 80% limit is for your own home, not a rental. Your ceiling comes from the investment-property program rules instead.
- Second lien: up to 70% CLTV at 720 or better, lines from $50,000 to $500,000.
- First lien (no mortgage on the rental): up to 75% LTV at 740 or better, stepping down at lower scores and on larger lines.
- Rent test: gross monthly rent must reach 1.10x the qualifying payment on the entire line.
- Not available: your own home, including a Texas homestead.
- Where it runs: Texas is one of the states where it is offered. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
A DSCR HELOC is a revolving line of credit on a rental you own. It is a second lien behind the first mortgage you keep, or a first lien on a rental with no mortgage. The rent qualifies the line, not your personal income file. An LLC can stay on title, subject to program terms. Lendmire is a broker and arranges the line; the lender underwrites it.
What sets your maximum line?
Your maximum is the combined-leverage cap times current value, minus every lien already recorded, then trimmed by the line-size limit. Equity sets the first ceiling. Rent sets the second. The smaller of the two wins.
Start with equity. The lender looks at what the property is worth today, not what you paid or what you hope it becomes. It adds your first mortgage balance to the new line and divides by that value. That result is combined loan-to-value, or CLTV. On a first lien with no other mortgage, the same math is plain LTV.
Here are the tiers on a non-owner-occupied one-to-four-unit rental, subject to underwriting:
| Lien position | Credit score | Leverage | Line size |
|---|---|---|---|
| Second lien | 720 or better | Up to 70% CLTV | $50,000 to $500,000 |
| First lien, no mortgage | 740 or better | Up to 75% LTV | Up to $500,000 |
| First lien, no mortgage | 700 to 739 | Up to 70% LTV | Up to $500,000 |
| First lien, no mortgage | 720 or better | Up to 65% LTV | Above $500,000 to $1,000,000 |
Two points trip people up. First, a borrower who keeps a first mortgage can only take a second lien, and that tier starts at 720. There is no second-lien cell below it. Second, a first lien exists only on a rental with no mortgage. A nearly paid-off rental still counts as a second-lien deal.
A declining-market flag on the property can lower the ceiling by 5 points. The lender decides that during underwriting.
What does the math look like on real files?
Run the numbers as percentages. They show who has room and who does not.
Say you own a rental valued at $400,000 with a first mortgage at 60% of value. The 70% CLTV cap leaves 10 points of room. On that value, 10 points comes to $40,000, which falls short of the $50,000 minimum line. This investor has no DSCR HELOC option today, even with strong credit.
Consider a rental valued at $650,000 with a first mortgage at 40% of value. The cap leaves 30 points of room, which clears the minimum comfortably. Equity is no longer the problem. Now the rent test decides, because the qualifying payment runs on the entire credit limit.
Picture a paid-off duplex held by an owner with a 760 score. A first lien can reach 75% LTV on lines up to $500,000. On a high-value property that $500,000 tier can bind before equity does. Going above $500,000 is possible, up to $1,000,000, but that tier is held to 65% LTV. You trade leverage for size, so compare the two before you ask for the bigger line. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
A first mortgage at 65% of value leaves little under a 70% ceiling, and at 70% or higher there is no second-lien room at all.
How does the rent test cap the line?
The rent test caps the line by dividing gross monthly rent by a stress payment on your full credit limit. The program wants at least 1.10x. That ratio is the debt service coverage ratio, or DSCR. A bigger line means a bigger stress payment, so the rent can limit you before equity does.
The qualifying payment is a fully amortizing principal-and-interest payment on the entire credit limit, figured at a rate 2 percentage points above the line’s starting rate. It is a test payment, not what you will owe each month. Taxes and insurance are not part of it. Texas rentals often carry heavy tax and insurance bills, so keep them in your own cash-flow math even though the qualifying test leaves them out.
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 property can have at most one vacant unit. If your rental sits empty, Lendmire’s piece How Much Can You Borrow on a DSCR HELOC on a Vacant Rental Without a Lease? walks through that problem.
On a second lien, confirm on the file how the lender treats the first-mortgage payment in its coverage calculation. The lender’s own calculation governs, and the arithmetic here is illustrative only.
This program qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. You do not submit tax returns, W-2s or pay stubs, and the lender does not calculate your debt-to-income ratio. Your credit, the property’s value and the lease are still reviewed.
Does Texas’s 80% home-equity limit apply to a rental?
No. Texas home-equity rules protect the homestead, and a rental is not one. The Texas A&M Real Estate Research Center explains that Section 50 of the Texas Constitution protects the homestead from forced sale and holds the home-equity lending provisions. It adds that these loans may not be taken out on a secondary residence or a rental or investment property. The constitution’s text, including its list of permitted liens, is on Justia.
In practice, the 80% combined cap, the waiting period and the one-loan-at-a-time rule belong to homestead equity loans. A non-homestead rental sits outside them. Your limit comes from the program’s own cap instead, which is 70% CLTV on a second lien.
Two Texas edge cases matter:
- Your own home: a DSCR HELOC is never offered on an owner-occupied home or a second home. If the property is your homestead, this route is closed.
- A former homestead: if you moved out and rented it, ask a Texas title attorney how the homestead protections treat the property before you apply. The answer depends on the facts, and a lender will look at occupancy too.
What can shrink your line?
Several things can cut the amount or end the deal before it starts.
Property type. Eligible properties include single-family homes, PUDs, townhomes, two-to-four-unit buildings, warrantable and non-warrantable condominiums, and lots up to 10 acres. The program excludes rural-designated property, which matters for Texas land outside the metros. It also excludes condotels, row homes, leaseholds, land trusts, age-restricted communities, hobby farms, modular and log homes, land contracts, mixed-use and commercial or agricultural property. A property listed for sale in the prior 2 months is out, and so is one with a solar lien.
Credit. There is no second lien below 720 and no first lien below 700. The lender’s own credit report sets your tier. Mortgage history matters as well: no 30-day late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
Exposure. One borrower can hold at most 5 loans or $2,500,000 with the program. Scaling investors should count existing lines.
Borrower status. U.S. citizens, permanent residents and non-permanent residents with a Social Security number qualify. Foreign nationals and ITIN borrowers do not.
Title. Vesting in your LLC is allowed on an investment property. The members sign as guarantors. Anyone on title who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument.
How does seasoning work?
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 fresh purchase will not work as a DSCR HELOC candidate until both clocks are done.
How do the draw rules affect your real cash?
The line is not a bottomless account. At least 80% of it is 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. Later draws must be at least $5,000 each.
The draw period runs 5 years, interest-only on the drawn balance. A 25-year fully amortizing repayment period follows, for a 30-year maturity. The rate is variable. The rate and pricing terms come with the lender’s disclosures.
No reserves and no cash to close are required. That helps an investor whose cash is tied up in other properties.
Which valuation path will your file take?
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 on Form 1004, 1073 or 1025. Appraisal waivers are not accepted.
Rent comes from the appraiser’s Form 1007 market rent schedule, which is why the lease and the appraisal both matter. Title work is a full policy on a first lien and on second liens above $400,000. Smaller second liens use an owner-and-encumbrance report.
Is a DSCR HELOC or a cash-out refinance the better fit?
A HELOC leaves your existing first mortgage alone. A cash-out refinance replaces it. If your first mortgage is one you want to keep, the line is the cleaner tool.
| Factor | DSCR HELOC | DSCR cash-out refinance |
|---|---|---|
| Your first mortgage | Stays in place | Replaced by a new loan |
| Leverage | 70% CLTV second lien; up to 75% LTV first lien | Up to 75% LTV on a standard rental; 70% on short-term-rental collateral |
| Structure | Revolving line, variable rate | New loan, funded in one piece |
| Reviewed on | Rent | Rent |
| Smallest size | $50,000 | Set by the program |
The complete DSCR loans guide explains the wider program family.
A HELOC on your own home is a different, owner-occupied product. This line is never offered on a primary residence.
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.
Key Terms Defined
- DSCR: gross monthly rent divided by the payment the lender tests; this program asks for at least 1.10x.
- CLTV (combined loan-to-value): the first mortgage balance plus the new line, divided by the property’s value.
- Lien position: where a loan stands in line for repayment; a second lien sits behind the first mortgage.
- Draw period: the stretch when you can borrow from the line and pay interest only on what you drew.
- Stress payment: the test payment on the full credit limit that rent must cover; it is not your actual bill.
- Seasoning: the waiting period the lender requires after a purchase or refinance.
What should you have ready?
- A signed lease or rent evidence, plus three months of rent receipts if the lease is above market rent.
- Your credit report details and mortgage payment history.
- The current first mortgage statement, if you have one.
- Vesting documents if the rental sits in an LLC.
- Access for the valuation or appraisal.
Frequently Asked Questions
Can I use a DSCR HELOC on a Texas rental held in an LLC?
Yes, subject to program terms. The members sign as guarantors, and the borrowers on the line need not be the borrowers on the first mortgage. A non-borrowing title holder signs an acknowledgment.
Does the lender look at my personal income?
No. The line is reviewed on the rental’s income, with no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. Your credit report, the lease, the property valuation and your mortgage history are all reviewed.
How soon after buying a rental can I open a 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). Both must be satisfied before the lender will consider the file.
What if my line comes out too small?
Check which test is binding. If thin equity is the cause, a DSCR cash-out refinance can reach higher leverage on a standard rental, though it replaces your first mortgage. If rent is the cause, a smaller line may pass the 1.10x test. Everything stays subject to underwriting.
Can I borrow on a Texas rental with a 700 credit score?
Only without a first mortgage. A first lien starts at 700 on a rental with no mortgage, at up to 70% LTV on lines up to $500,000. A second lien behind a mortgage you keep needs 720 or better. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
If you are considering a line on your rental
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. Programs change, and every file is underwritten individually.
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. Texas A&M Real Estate Research Center, What to Know About Home Equity Loans in Texas
2. Justia, Texas Constitution Art. 16 §50
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 as a Trucker With Equipment Costs? · DSCR HELOC Requirements for Sizing How Much Equity to Borrow · How Much Can You Borrow on a DSCR HELOC on a Rental That Still Has a First Mortgage?
Guides: DSCR HELOC in Texas
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.