The Quick Read: The most you can borrow is the rental’s value times the program’s maximum combined leverage, minus every lien already on the property, and the rent test, line-size limits and valuation path can shrink that number further. On a second lien through select programs in Lendmire’s network, combined leverage tops out at 70%, subject to underwriting.
- Second lien: up to 70% CLTV at a 720 score or better, on lines of $50,000 to $500,000.
- First lien (rental with no mortgage): up to 75% LTV at 740 or better, 70% at 700 to 739, and 65% on lines above $500,000 up to $1,000,000.
- The rent must cover a stress payment on the entire line at a 1.10x minimum.
- At least 80% of the line is drawn at closing, so the “available credit” you picture is smaller than a bank HELOC suggests. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The Sizing Formula
The formula is simple: value × maximum combined ratio − existing liens = the most the line can be. The CFPB’s HELOC booklet explains the same arithmetic for consumer lines: the lender sets the limit as a percentage of value, then subtracts what you owe on the mortgage.
Combined loan-to-value (CLTV) adds every loan secured by the property and divides by value. Lenders usually count the full credit limit, not just what you draw. That matters when you plan to leave part of a line unused.
Three limits can bind, and the tightest one wins:
1. The percentage cap, which depends on lien position and credit score. 2. The dollar range: lines start at $50,000 and run to $500,000 on a second lien. 3. The rent test, which can bind before equity does.
Which Lien Position Are You Writing?
A DSCR HELOC is a standalone second lien behind a first mortgage you keep, or a standalone first lien on a rental with no mortgage. It is never closed with a purchase, never a third lien, and never placed on your own home. The LLC can stay on title (investment property only), with members signing as guarantors, subject to underwriting.
| Factor | Second lien | First lien |
|---|---|---|
| Existing mortgage | Keep it | None on the rental |
| Max leverage | 70% CLTV | 75% LTV at 740+; 70% at 700-739 |
| Credit floor | 720 | 700 |
| Line range | $50,000-$500,000 | To $1,000,000 |
| Large lines | Not available above $500,000 | 65% LTV above $500,000 |
Here is where leverage trips people. A borrower with a first mortgage can only take a second lien, so the 720 floor and the 70% ceiling apply. A first lien exists only when the rental carries no mortgage at all.
What Does the Math Look Like in Practice?
Run three modeled situations, each in percentages. Figures are illustrative, and the lender’s own calculation governs.
Free and clear, strong credit. A rental with no mortgage and a 740 score can reach 75% LTV on a line up to $500,000. Above $500,000, the ceiling drops to 65%, so a bigger line does not simply scale up. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Moderate first mortgage. Say the first mortgage sits near 45% of value. A second lien capped at 70% CLTV leaves room of roughly 25 points of value for the new line, before any other limit applies.
Heavy first mortgage. If the first lien already sits at or near 70% of value, no second lien is possible until paydown or appreciation creates room. Equity alone does not equal borrowing power.
Two program flags can lower the number further. A declining-market flag lowers the ceiling by 5 points, and Philadelphia lines carry a ceiling 10 points lower.
How Does the Rent Test Cap the Line?
The rent test is where a line that fits on equity can still fall short. Minimum DSCR is 1.10x: gross monthly rent divided by a qualifying payment. That payment is a fully amortizing payment on the entire credit limit at the start rate plus 2 percentage points, so it is a stress test, not what you will actually pay. Taxes and insurance are not part of it. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
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 one vacant unit.
On a second lien, confirm on the file how the lender treats the first-mortgage payment in the coverage calculation. The lender’s calculation governs.
Because the test runs on the full line, a smaller line can pass where a larger one fails. When rent is thin against a large first mortgage, trimming the line is often the cleaner fix than hunting for a higher score.
The Draw Rules Nobody Mentions Up Front
At least 80% of the line 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 are at least $5,000 each.
The structure is a 5-year interest-only draw period on the drawn balance, then a 25-year fully amortizing repayment period, with a 30-year maturity. The rate is variable. The CFPB notes that a HELOC has a draw period followed by a repayment period, may carry minimum draws or initial advances, and that you could lose the property if you cannot repay. Payments step up when repayment starts, so plan for that turn.
If you want a revolving cushion you barely touch, this program is the wrong shape. A line sized to what you will deploy fits better.
Valuation, Title and Seasoning
Lines up to $400,000 use an automated valuation (confidence score of 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.
Title work scales too: a full title policy on a first lien and on second liens above $400,000, and an owner-and-encumbrance report on smaller second liens.
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 recent BRRRR refinance therefore has to wait.
Credit history matters too: 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 or cash to close are required, and exposure is capped at 5 loans or $2,500,000 per borrower with the program.
What Falls Outside the Program
These property types are out: rural-designated property, condotels, row homes, leaseholds, land trusts, age-restricted communities, hobby farms, modular and log homes, land contracts, mixed-use, commercial or agricultural property, and properties with a solar lien. A rental listed for sale in the prior 2 months is also out.
Eligible types include single-family, PUD, townhome, two-to-four units, warrantable and non-warrantable condominiums, and lots up to 10 acres. Foreign nationals and ITIN borrowers are not eligible. US citizens, permanent residents and non-permanent residents with a Social Security number are.
The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Lendmire is the broker, placing the line through a wholesale lender in its network.
Key Terms Defined
CLTV: combined loan-to-value, every lien on the property added together and divided by its value.
Draw period: the stretch when you can borrow from the line and pay interest only on what you drew.
Repayment period: the stage after the draw period when the balance amortizes with principal and interest.
DSCR: debt service coverage ratio, the rent divided by the qualifying payment.
Seasoning: the time since you bought or refinanced the property or took title.
When the Number Doesn’t Fit
Several outcomes call for a different tool. If equity is thin after the first mortgage, the line may be small or impossible, and a cash-out refinance on the whole balance might fit better. NerdWallet notes investment-property HELOCs generally mean fewer lenders and less borrowing than on a primary home.
If you want to keep a low first mortgage, a second lien preserves it, while a refinance replaces it. Lendmire’s piece on investment property HELOCs for investors covers the personal-income version of the product. The complete DSCR loans guide explains how property-rent-based lender review works across loan types.
If the rent falls short of 1.10x on the full line, shrink the line, wait for rent growth, or choose a different structure. Tax treatment varies; consult a qualified professional.
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.
Frequently Asked Questions
Does the DSCR HELOC count the whole line or only what I draw?
The qualifying test runs on the entire credit limit, not the drawn balance. The coverage calculation uses a fully amortizing payment on the full line at the start rate plus 2 percentage points. At least 80% of the line is drawn at closing in any case. Subject to underwriting.
Can an LLC hold title?
Yes, on investment property, through this program. Members sign as guarantors, and a title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. Whether any given lender allows it varies, so confirm against the program’s guidelines.
How long do I have to wait after buying or refinancing?
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 are subject to underwriting.
What is the largest line available?
Lines run to $1,000,000, but only as a first lien on a rental with no mortgage. Above $500,000, the ceiling is 65% LTV at 720 or better. A second lien tops out at $500,000 and 70% CLTV. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Does a higher credit score raise my leverage?
It can on a first lien, where 740 or better reaches 75% LTV and 700 to 739 reaches 70%. On a second lien, 720 or better is the entry point and 70% CLTV is the ceiling. Scores below 720 have no second-lien cell. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. DSCR home equity lines of credit — revolving lines on non-owner-occupied one-to-four-unit rentals, qualified on the property’s rent instead of the owner’s personal income — are arranged through wholesale lenders in 15 of those 16 states (every licensed state except Tennessee), and every line is underwritten by the lender under its program 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. CFPB – What you should know about HELOCs (booklet)
2. CFPB
3. 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 With an Appraisal Below the Purchase Price? · How Much Can You Borrow on a DSCR HELOC as a Co-Owner Who Is on the Deed? · How Much Can You Borrow on a DSCR HELOC for Landlords Choosing a Lender?
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.