The Quick Read: It depends on the lowest of three limits: the equity left in the rental you already own after the program’s combined loan-to-value ceiling, the rent test that sizes the whole credit line, and the line-size cap, which is $500,000 on a second lien and runs to $1,000,000 on a first lien. The offer price does not set the number. The line is secured by a rental you keep, never by the property you are buying.
- On a second lien behind your existing mortgage, combined loan-to-value tops out at 70% at a 720 score or better, subject to underwriting.
- At least 80% of the line is drawn at closing, so size it to the cash you need.
Why the Cash Offer Doesn’t Size the Line
Capacity comes from the collateral property, not the target. A home equity line on a rental is a standalone lien. It is never closed together with a purchase, so you cannot borrow against a house you do not own.
The structure works in two steps. You open a line on a rental you already own, draw the cash, and then submit a no-financing-contingency offer on the next property. The seller sees cash. The lien sits on your existing rental.
Across Lendmire’s wholesale network, this product is a revolving line written as a standalone second lien behind the first mortgage you keep. It can also be a standalone first lien on a rental with no mortgage. It is not offered on your own home or a second home. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines: no traditional personal-income documentation, W-2s or personal income calculation. The LLC can stay on title on investment property, and the members sign as guarantors.
Lendmire is the broker here. A wholesale lender in its network reviews and approves each file, and every figure below is subject to underwriting.
How Much Room Does the Equity Leave?
The equity test is simple arithmetic. Combined loan-to-value is the first mortgage balance plus the new line, divided by the property’s value. The program caps that ratio, and your room is whatever sits between your current balance and the cap.
Run it in percentages. Say a rental’s first mortgage equals 45% of its value. At a 70% combined ceiling, the new second lien can reach about 25% of the property’s value. Then the line-size cap and the rent test apply, and the smaller result wins.
A first lien works on the same logic with different ceilings, and the tiers below show the loan-to-value limits on a rental with no mortgage.
- 740 or better: up to 75% on lines up to $500,000.
- 700 to 739: up to 70% on lines up to $500,000.
- Lines above $500,000, up to $1,000,000: 65% at a 720 score or better.
A borrower who keeps a first mortgage takes the second lien. The first-lien path exists only on a rental with no mortgage.
Value means a valuation the lender orders, not what you paid or what you hope the rental is worth. 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. Above $400,000, a full interior appraisal is required. Appraisal waivers are not accepted. A declining-market flag lowers the ceiling by 5 points, and Philadelphia lines carry a ceiling 10 points lower.
The Rent Test Can Cap the Line Below the Equity
The second limit surprises people with plenty of equity. The rent must clear a debt service coverage ratio of at least 1.10x. That is gross monthly rent divided by a qualifying payment. The payment is a fully amortizing principal-and-interest figure on the entire credit limit at the start rate plus 2 percentage points. It is a stress payment, and taxes and insurance are not part of it.
Two details matter on file:
1. The whole line counts. The qualifying payment is built on the full credit limit, not the drawn balance. Taking only part of the line does not lower the test.
2. The rent number is conservative. Rent is the lesser of the appraisal’s Form 1007 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.
Picture a rental with deep equity but modest rent. The equity math might support a larger line than the rent test allows. The rent test then governs, and the line shrinks until coverage clears 1.10x.
On a second lien, confirm on the file how the lender treats the first-mortgage payment in its coverage calculation. That treatment is not published as a single formula, and the lender’s own calculation governs.
Credit, Title and Eligibility Checks
Credit is a floor, not a lever. The minimum is a 720 score on a second lien and 700 on a first lien, using the lender’s own report. The file also needs no 30-day mortgage late in the last 12 months. It needs 48 months since any bankruptcy, foreclosure, short sale or deed-in-lieu. No reserves and no cash to close are required. Exposure is limited to 5 loans or $2,500,000 per borrower with the program.
Eligible borrowers are US citizens, permanent residents and non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible.
The collateral must also be the right kind of property. Single-family, PUDs, townhomes, two-to-four units, warrantable and non-warrantable condominiums, and lots to 10 acres are eligible. These are not:
- Rural-designated property.
- Row homes.
- Condotels.
- Leaseholds and land trusts.
- Age-restricted communities.
- Mixed-use property.
- A property listed for sale in the prior 2 months.
- A property with a solar lien.
If your best equity sits in a row home or a condotel, this lane does not reach it.
This program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Rental ownership must also pass 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).
The Draw Rules Change How You Size the Line
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. On the smallest lines, that means the whole line is drawn at closing.
This shapes the strategy. You cannot open a large line, leave most of it idle, and tap it when an offer is accepted. Size the line to the cash the purchase needs, plus closing costs and a repair cushion, because you pay on what you draw.
The draw period is 5 years interest-only on the drawn balance. A 25-year fully amortizing repayment period follows, with a 30-year maturity. The rate is variable. The rate and the pricing terms come with the lender’s disclosures, not from this article.
Because the money lands in your account at closing, the cash offer rests on funds you hold. For proof of funds, the cleanest evidence is the drawn balance in your own account. Escrow and sellers set their own standards, so confirm what the seller’s side will accept.
What Happens After the Cash Purchase
The usual exit is to buy the property with cash, stabilize it, and then place long-term financing on it. That product is reviewed on the new rental’s own rent.
The exit carries real risk. As one BiggerPockets discussion points out, a refinance on the new property is unlikely to repay the line unless the property’s value rises through improvements. Another BiggerPockets thread notes that funding a purchase this way means borrowing close to 100% of the price.
That risk compounds in a falling market. You would then hold two liens, the line on the old rental and whatever sits on the new one, with little equity cushion on either.
Line vs Cash-Out vs Hard Money vs Purchase Loan
| Option | Secured by | Reviewed on | Cash-offer fit |
|---|---|---|---|
| DSCR HELOC | Rental you own | Rent and equity | Cash in your account |
| DSCR cash-out refinance | Rental you own | Rent and equity | Replaces first mortgage |
| Hard money | Often the target | Asset and exit plan | Often breaks cash profile |
| DSCR purchase loan | The target | Target’s rent | Financing contingency |
The line suits an owner who wants to keep a low-cost first mortgage in place. A cash-out refinance suits an owner who wants one new loan on the old rental and can accept replacing the first mortgage. A purchase loan is the right tool when the seller will take financing. Lendmire’s complete DSCR loans guide covers the full range of structures.
Other Ways Investors Fund a Cash Offer
Many investors borrow against their own home instead. That is an owner-occupied product with its own rules, and it puts your residence at risk.
Lender appetite also varies. NerdWallet notes that investment-property HELOCs are not offered by all lenders, so a local bank that declines is not the end of the search. A wholesale network brings more programs to a single file.
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.
Key Terms Defined
DSCR HELOC: A revolving line secured by a rental you keep, sized and qualified on the rent rather than your personal income.
Combined loan-to-value (CLTV): All liens on the property, including the new line, divided by the property’s value.
Draw period: The 5 years when you pay interest only on the drawn balance before repayment begins.
Stress payment: The qualifying payment on the full line at the start rate plus 2 percentage points.
Cash offer: An offer with no financing contingency, backed by funds you already hold.
A Fit Checklist
The line works when:
- You own a rental with real equity after the 70% second-lien ceiling.
- The rent covers the stress payment at 1.10x or better.
- You can name the purchase, the draw size and the exit.
- The collateral is an eligible property type held long enough to satisfy seasoning.
Skip it when:
- The equity is thin.
- The collateral is a row home, a condotel or rural property.
- The plan depends on a refinance of the new rental that needs a value jump to work.
- You cannot carry two payments while the new property stabilizes.
If equity is the problem, a smaller purchase, a partner, or a different tool such as a DSCR cash-out refinance may fit better.
Frequently Asked Questions
Can I borrow against the property I’m trying to buy?
No. The line is never closed together with a purchase, so the target cannot secure it. You borrow against a rental you already own, draw the cash, and use it for the offer.
Does an undrawn line count as proof of funds?
That depends on the seller and the escrow side. At least 80% of the line is drawn at closing, so most of the money arrives as cash in your account. That drawn balance is the cleanest evidence, and you should confirm what the other side will accept.
Can my LLC hold the rental?
Yes, on investment property. The LLC can stay on title and the members sign as guarantors. 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 be the borrowers on the first mortgage, subject to program guidelines.
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). A fresh purchase cannot be collateral right away.
What if the equity is too thin for the cash I need?
Check which limit is binding: equity, the rent test, or the line cap. Lowering the draw, adding a second collateral property under a separate line, or moving to a different structure can each change the result. Each line is secured by one property, so equity in one rental cannot support a line on another.
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 through Lendmire’s quote page.
The investors who get the most from this structure treat the line as a bridge with a defined exit, not as free cash.
For current guidelines and terms, see Lendmire’s DSCR HELOC programs page.
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. BiggerPockets: Thoughts on Using HELOC From Primary Home for First Investment Property
2. BiggerPockets: Using HELOC for Down Payment or Full Purchase
3. 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 for Refinancing a Balance Into a New HELOC? · How Much Can You Borrow on a DSCR HELOC for a Mortgaged Rental With a Fixed First? · How Much Can You Borrow on a DSCR HELOC as a Co-Owner Who Is on the Deed?
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.