The Quick Read: It depends on three things: the value of the rental holding the line, the first mortgage you still owe, and the combined leverage cap, which on a second lien tops out at 70% of value for borrowers with a 720 credit score or better, with lines running from $50,000 to $500,000, subject to underwriting. The line only produces cash, and a separate purchase loan on the package does the buying. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
- The line equals value times the leverage cap, minus what you owe on the first mortgage.
- The rent on the rental holding the line qualifies it, at a 1.10x minimum on a stress payment over the whole line.
- At least 80% of the line is drawn at closing, so size the line to the need.
- The rental you are buying cannot secure the line, because the line is never closed with a purchase.
What “Primary Rental” Means Here
Here, “primary rental” means the rental you already own and plan to keep, the one carrying the equity. It does not mean your home. A DSCR home equity line (a revolving credit line qualified on the rental’s income coverage, known as the debt service coverage ratio) is written on non-owner-occupied one-to-four-unit rentals. It is never offered on an owner-occupied home or a second home.
The line sits as a standalone second lien behind the first mortgage you keep. If the rental has no mortgage, it sits as a standalone first lien. It is never a third lien. Vesting in your LLC is allowed on investment property, subject to program terms. The members sign as guarantors.
Lendmire is a broker. It places these lines through a wholesale lender in its network, and the lender underwrites every file individually. The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
How Is the Borrowable Amount Calculated?
The line is the rental’s value times the combined loan-to-value cap, minus the mortgage balance you already owe. Combined loan-to-value (CLTV) counts every lien on the property, so the first mortgage and the new line together are divided by the value. The CFPB’s HELOC booklet describes this same method for setting a credit limit: take a percentage of the appraised value, then subtract the mortgage balance.
Across Lendmire’s wholesale network, the leverage ceilings for this program depend on the lien position:
| Lien position | Credit score | Leverage ceiling |
|---|---|---|
| Second lien, lines to $500,000 | 720 or better | 70% CLTV |
| First lien, lines to $500,000 | 740 or better | 75% LTV |
| First lien, lines to $500,000 | 700 to 739 | 70% LTV |
| First lien, lines above $500,000 to $1,000,000 | 720 or better | 65% LTV |
These are ceilings, not offers, and all are subject to underwriting. Below 720 there is no second-lien option. A declining-market flag lowers the ceiling by 5 points. Philadelphia lines carry a ceiling 10 points lower.
A first lien exists only on a rental with no mortgage. If you keep a first mortgage, the line is a second lien.
A Worked Example in Percentages
Say your rental is valued at a round 100 units for illustration, and your first mortgage balance equals 45% of that value. At the 70% CLTV ceiling, the line can reach up to 25% of value. That is before the $500,000 line cap and the $50,000 minimum line.
Now change one input. If your first mortgage is 60% of value, the room shrinks to 10% of value.
Run the same rental with no mortgage and a 740 score. The first-lien ceiling is 75% of value on lines up to $500,000. The same property with a 700 to 739 score tops out at 70%.
This is why the first question is never “how big a line?” It is “how much equity is left after the first mortgage?”
Does the Rent Cover the Line?
Rent qualifies the line, not your paycheck. The program reviews the file on the rental’s income, with no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. The minimum is 1.10x: gross monthly rent divided by a qualifying payment.
That qualifying payment is a fully amortizing payment on the entire credit limit at the start rate plus 2 percentage points. It is a stress payment. It covers principal and interest only, not taxes or insurance. A lease must be in place, and a two-to-four-unit property may have at most one vacant unit.
The test runs on the whole limit, not on what you draw. A bigger line means a bigger stress payment, so rent can cap the line before equity does. The lender’s own calculation governs.
Why You Cannot Draw a Little
Drawing small is not an option on this program. At least 80% of the line is drawn at closing, and the closing draw is never under $50,000. On the smallest lines, the whole line is drawn at closing. Later draws must be at least $5,000 each.
During the 5-year draw period, you pay interest only on the drawn balance. Then a 25-year repayment period follows, with full amortization and a 30-year maturity. The rate is variable. The pricing terms come with the lender’s disclosures.
So size the line to the package. Add up the purchase loan’s down payment, closing costs and any cushion you want, then ask for a line close to that total. Cash drawn and left idle still carries interest. A line much larger than the need costs you interest on money you are not using.
What the Purchase Lender Will Look At
The line does not buy anything. You close it first as its own transaction, then use the cash on a separate purchase loan for the package. That purchase loan is judged on the new property: its rent, its monthly obligation and its valuation. The line’s payment is a real cost on your first rental, and your cash flow feels it. Check how the purchase lender treats the line, because each lender’s guidelines differ.
Expect the purchase lender to want the down payment traced. Statements showing the draw and where the funds went make that easy. A purchase lender may have its own rules on borrowed funds, so raise the question before you contract.
A package purchase can mean several properties and a larger down payment. That usually argues for a larger draw, and the rent on the collateral rental must carry that larger line.
The File: Valuation, Credit and Seasoning
Lines up to $400,000 use an automated valuation (confidence score 85 or better) with a property inspection report, or a full interior appraisal. Lines above $400,000 take a full interior appraisal. Appraisal waivers are not accepted.
Credit minimums are 720 on a second lien and 700 on a first lien. The lender’s own credit report sets the tier. The mortgage history needs no 30-day late payment in the last 12 months. Allow 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu. Tradeline-depth rules are waived at 700 and above. No reserves and no cash to close are required, subject to underwriting.
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).
Exposure is capped at 5 loans or $2,500,000 per borrower with the program. Borrowers must be US citizens, permanent residents, or non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible.
Which Rentals Do Not Qualify?
Eligible properties include single-family homes, PUDs, townhomes, two-to-four-unit buildings, and warrantable and non-warrantable condominiums, plus lots up to 10 acres. The leverage tiers above apply to every property type.
Not eligible on this program: rural-designated property, row homes, condotels, commercial or agricultural property, leaseholds, land trusts, age-restricted communities, hobby farms, modular and log homes, land contracts, mixed-use buildings, a property listed for sale in the prior 2 months, and a property with a solar lien.
Equity also does not pool. Each line attaches to one property, so you cannot blend equity from several rentals into one facility.
What Happens If Values Drop?
The CFPB notes that a lender may decline further draws if the property’s value drops significantly. The cash you count on tomorrow is not guaranteed.
Borrowing against rental #1 to buy rental #2 links the two. A drop in rent or value on either one stresses both. Keep the rent on rental #1 well above the 1.10x minimum, not just at it.
NerdWallet reports that an investment-property HELOC is harder to get than one on a primary home, because lenders see higher default risk and not every lender offers one. Lendmire’s wholesale network is the broker’s answer to that: it compares programs, so you do not hit that wall one bank at a time.
Line, Cash-Out Refinance or Cash?
| Factor | DSCR HELOC | Cash-out refinance | Your own cash |
|---|---|---|---|
| First mortgage | Stays in place | Replaced | Untouched |
| Draw flexibility | Revolving, draws from $5,000 | One lump sum | Whatever you hold |
| Best fit | Staged, mid-size needs | Larger or portfolio needs | No borrowing risk |
| Main trade-off | Variable rate, tied to one rental | Lose current first-lien terms | Ties up liquidity |
The first-mortgage question often decides it. If your current first mortgage is one you want to keep, a second-lien line leaves it alone. If the first mortgage is expensive or you need a large sum, a cash-out refinance may fit better.
Key Terms Defined
DSCR (debt service coverage ratio): the rental’s gross monthly rent divided by the qualifying payment.
CLTV (combined loan-to-value): the first mortgage balance plus the new line, divided by the property’s value.
Draw period: the 5 years in which you borrow against the line and pay interest only on what you have drawn.
Seasoning: the waiting time since you bought or refinanced the rental and took title.
Lien: the lender’s legal claim on the property, ranked first or second by when it was recorded.
Frequently Asked Questions
Can the rental I’m buying secure the line?
No. The line sits on a rental you already own and keep, and it is never closed together with a purchase. The package gets its own purchase loan.
Does the line’s payment count in the new rental’s DSCR?
The purchase loan is generally judged on the new property’s own rent against its own monthly obligation, subject to that lender’s guidelines. The line’s payment sits on rental #1, so it hits your real cash flow even if it does not appear in that ratio. For the collateral rental, the lender’s coverage calculation on the line governs.
How long must I own the rental before opening 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 title to the rental?
Yes, on investment property, subject to program terms. The LLC members sign as guarantors, and a title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. The borrowers on the line need not match the borrowers on the first mortgage.
Can I use this line on my own home?
No. This program is for non-owner-occupied one-to-four-unit rentals only. A line on your own home is a different, owner-occupied product with its own rules.
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’s piece on using a HELOC on a primary rental covers the strategy side, and the complete DSCR loans guide explains how the purchase loan on the package is judged. Reach Lendmire at 828-256-2183 to talk through a file. Program details 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
2. CFPB: What Is a Home Equity Line of Credit HELOC
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: How Much Can You Borrow on a DSCR HELOC for Landlords Choosing a Lender? · 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 Without Changing the Deed?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.