The Quick Read: It depends on how much equity the property holds after a lender caps all liens against its appraised value, not on the size of your private loan. Across the programs Lendmire’s network places this line on an investment property, that cap is typically 70% combined loan-to-value, with a maximum line of $500,000. Each file is reviewed individually, subject to lender guidelines.
- The formula: maximum line equals the cap times the appraised value, minus the first mortgage and any other lien that stays in place.
- The test: combined loan-to-value (CLTV) adds every lien on the property and divides the total by its appraised value.
- The credit floor: network guidelines on an investment property generally look for a minimum credit score of 700.
- The fallback: a DSCR refinance (a loan sized on the property’s rent, not your income) can retire a private loan when the line is too small or too restricted.
If you already hold a private loan and want to retire it, the question is rarely “how big can the line be?” The better question is “does the line, after the lender sizes it, cover my full payoff?” Your payoff letter, not the original loan amount, gives the number the line has to cover.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
Key Terms Defined
These terms come up when a private lender’s loan and a line of credit are involved on the same property.
- Draw period: the stretch of time when you can borrow from the line, repay, and borrow again.
- Payoff letter: the private lender’s written statement of the exact amount needed to close out the loan on a given date.
- Due-on-encumbrance clause: a note provision that lets the private lender demand repayment if you record another lien on the property.
- Subordination agreement: a signed document in which an existing lienholder agrees to sit behind a new, senior loan.
- Seasoning: the waiting period a lender wants between buying a property and refinancing it.
- DSCR: the debt service coverage ratio, which compares monthly rent to the full monthly payment (principal, interest, taxes, insurance, and any HOA dues).
- Expense factor: the percentage a lender subtracts from your bank deposits to estimate business expenses before it counts the rest as income.
How the Line Size Is Actually Calculated
The line size comes from one formula. Take the CLTV cap times the appraised value. Subtract the first mortgage. Subtract any other lien that will stay on the property. What remains is the most the lender can offer.
Academy Bank’s explainer notes that lenders use CLTV whenever more than one loan is secured by the same property. A private loan secured by that property counts in the total. The private loan balance does not shrink the line the way a bank account balance would. It matters only because it is a lien.
Here is a worked example using index numbers instead of dollars, so you can swap in your own figures. Say the property appraises at 100, the first mortgage is 40, and the cap is 70%.
- Cap times value gives 70.
- Subtract the first mortgage of 40.
- The most the new line can be is 30.
Now test two private loans against that 30.
1. Private loan of 25, secured by this same property. The line pays it off, that lien is released, and the file fits with room to spare.
2. Private loan of 35. The line falls 5 points short. You bring cash, or you switch to another route.
One more case matters for investors, and it changes the lien position. A line normally sits behind a first mortgage, as a junior lien. If the private loan is the only lien, at 60 against a value of 100, paying it off releases that lien, so the new line becomes the first lien. Lenders generally size against the liens that remain after closing, so a 70% cap leaves 70 of capacity against a 60 payoff. The payoff letter can add interest and fees, though, so confirm the true number before you count on that cushion.
What Lendmire’s Network Typically Allows
On an investment property, the bank statement HELOC programs Lendmire places typically cap the line at 70% CLTV and $500,000. They generally want a credit score of 700 or higher. Lendmire’s bank statement HELOC program page lays out these guidelines. Each file is reviewed individually, and none of this is a commitment to lend.
Title is the detail that surprises investors. Title generally must sit in your personal name or a revocable living trust, subject to lender program eligibility. A property held in an LLC usually does not fit. That matters because many investors who borrowed privately did so inside an entity.
Market surveys paint a wider picture. NerdWallet reports that lines on investment properties are limited and strict. It cites a maximum of 80% LTV, with many lenders sitting below 70%, and at least 20% equity required. Those are market-wide figures from lenders. The network figure for an investment property is the 70% CLTV above.
How the Bank Statement Part Works
A bank statement HELOC is reviewed around documented deposits instead of pay stubs and tax returns. The lender still reviews credit, title, and the property. Think of it as a different way to document income, not a way around review.
Scotsman Guide describes the general method for self-employed borrowers. You provide 12 to 24 months of personal or business statements. The lender applies an expense factor, or accepts a profit-and-loss statement or an expense letter from a third-party tax professional. The article is older, so use it for the structure, not for current numbers. Its 50% factor is an example. Each program sets its own, and you do not choose it.
Before the lender averages anything, it screens out the deposits that are not income. Transfers between your own accounts, loan proceeds, and large unexplained deposits all come out. The loan-proceeds exclusion catches investors who parked a private loan’s proceeds in the same account used for their statements.
The line also revolves. The CFPB describes a HELOC as an open-end line you can draw on repeatedly during a draw period. It also says these lines usually carry a variable rate, so payments can change from month to month. Draw-period length varies by program, so get it in writing from whichever lender you work with.
The Real Blocker: Your Private Loan’s Note
For most investors the formula is the easy part. The private loan’s contract is the hard part.
If the private loan is a first lien on the same property, a standard HELOC would sit behind it. Two clauses decide whether that can happen. A due-on-encumbrance clause lets the private lender call the loan if you record another lien. A subordination agreement is what a junior lienholder signs to stay behind a new senior loan.
So the practical order of operations is simple.
1. Read the note for due-on-encumbrance language.
2. Decide whether the line will replace the private loan or sit behind it.
3. If it replaces the loan, the line must be large enough for the full payoff.
Entity ownership is the other common snag. If an LLC is the borrower on the private loan, the line lender’s title rules may not fit that property at all.
Two Ways to Set It Up
You have two collateral paths, plus a third route if the line does not work. Each trades one risk for another.
| Path | What happens | Main tradeoff |
|---|---|---|
| Line on the same property | Line retires the private loan | Must cover full payoff |
| Line on a different property | Private loan stays untouched | Puts another asset at risk |
| DSCR refinance | New long-term loan pays off the private loan | Rent coverage and seasoning apply |
Line on a different property. The line draws on equity in a property you own free and clear, or with a modest first mortgage. CLTV is tested only on that collateral. The private loan balance does not reduce the line. The payoff still has to fit under the cap. The risk is that you have now secured short-term debt with a second property.
Line on the same property. The line pays off the private lender and takes its place. This is the cleaner structure when the numbers fit, because only one property is involved. It is also the path that depends most on the note and the payoff letter.
Get the Payoff Number Right
Your payoff is almost never just the principal. The payoff letter can include accrued interest, minimum-interest clauses, extension fees, and exit fees. Lendmire’s refinance math treats a bridge-style payoff as a number that keeps growing while you wait, not one that sits still.
Run these steps in order.
1. Request the payoff letter, dated close to when you expect to pay.
2. Add any prepayment or minimum-interest charges the note requires.
3. Add your own closing costs on the new line.
4. Compare that total against the maximum line from the formula.
If the total exceeds the line, the gap is yours to cover with cash. Investors also pay closing costs twice when they start with a short-term loan and then refinance, so factor both rounds into the decision.
Also ask whether the lender reviews your file on the full line or only on the amount drawn. That answer varies by lender, and it changes how much income you need to show. A line much larger than your payoff can cost you qualification room you do not need.
Three Investor Scenarios (in Percentages)
These are modeled assumptions, not market data.
Scenario one: plenty of equity. An investor owns a rental free and clear and gets a line on it. The private loan is on a different property. The 70% cap leaves a large share of value available, though the $500,000 maximum line still limits the amount, and the payoff is a small fraction of what remains. The line fits. The investor still weighs putting a second property at risk.
Scenario two: thin equity. A rental holds a first mortgage at 55% of value. A 70% cap leaves only 15 points of room. If the private loan needs 25 points to retire, the investor is 10 points short, and the line cannot do the job alone.
Scenario three: strong rent, thin equity. The same thin-equity investor looks at a DSCR loan instead. A DSCR loan that covers only the payoff and closing costs is usually treated like a rate-and-term refinance. A DSCR cash-out file tops out around 75% LTV on a standard rental. The DSCR route needs rent that supports the property’s debt obligations, so if the rent is strong enough, the investor can retire the private loan with a single new first mortgage rather than relying on a line that stops 10 points short.
When a DSCR Refinance Beats the Line
If the private loan was a short-term bridge on a rental, the long-term exit is often a DSCR loan. Here is how the two products stack up.
| Factor | Bank statement HELOC | DSCR loan |
|---|---|---|
| Reviewed on | Bank deposits | Property rent vs payment |
| Typical ceiling | 70% CLTV, investment property | 75% LTV cash-out, 85% LTV rate-and-term |
| Cap on size | About $500,000 | Up to $3,000,000, standard programs |
| Title | Personal or revocable trust | LLC allowed, subject to program terms |
| Credit | About 700 minimum | 620 floor, 660 common, 700+ strongest |
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Select programs start at a 1.00 coverage ratio, and stronger ratios open better terms. Lenders also want about 6 months of reserves on most files, or about 9 months above $1,500,000, and about 6 months of ownership before a cash-out. Payoff-only files are treated more gently on seasoning. That is lender policy, not law.
One caution about DSCR coverage. It compares rent to the full monthly payment only. Clearing 1.00 does not mean you have positive cash flow, because repairs, vacancy, management, and utilities sit outside the calculation.
The right product depends on your income type. A self-employed investor whose tax returns understate real cash flow may favor the bank statement route. An investor with strong rents and a stable tenant may find the DSCR loan larger, longer, and easier to size. The complete DSCR loans guide walks through the DSCR side in detail. For the same question when the debt is a regular investment-property mortgage, see Lendmire’s piece How Much Can You Borrow on a Bank Statement HELOC to Pay Off an Investment Property?.
Risks Worth Pricing In
Moving a short-term private loan onto a line changes the shape of your risk. It does not remove it.
- Variable payments. The CFPB’s HELOC brochure says HELOCs typically involve variable rates, so your cost can move after closing.
- Cross-collateral. A line on a second property puts that asset behind a debt that used to sit on only one.
- Small cushion. At a 70% cap, a modest drop in appraised value can wipe out the room you planned on.
- Revolving temptation. Repaying the balance restores availability. That is useful, but it also means unused capacity can be spent on the next project.
- Not the same as a hard money line. Some lenders sell a short-term asset-based product with a similar name. It is a different structure from a bank statement HELOC, so do not compare them as equals.
A Brief Note on Business Purpose
Credit used to buy or improve a non-owner-occupied rental is generally treated as business-purpose credit, which is typically exempt from consumer-lending rules. A signed statement of purpose can help the lender decide. A checked box alone, with no record of how the proceeds will be used, may not be enough. Keep your documents clean, and expect the lender to review the purpose of the loan case by case.
What to Do Next
Gather the pieces in this order, so you know your real numbers before you apply.
1. Pull the private loan note and payoff letter, and read the encumbrance and prepayment language. 2. Get a realistic value estimate and add up every lien on the property. 3. Run the formula at a 70% cap and compare it with your payoff plus closing costs. 4. Assemble 12 to 24 months of statements and flag any transfers or one-time deposits. 5. Price a DSCR refinance as the alternative, so you are comparing two real options.
The right program for you depends on your property type, credit profile, leverage need, and documentation. Lendmire is a mortgage broker that works with a network of wholesale lenders, so one conversation can test both routes against your file. If you hold a private loan on an investment property and want to see how the numbers work, Lendmire can help you compare options based on your equity, your income documentation, and your exit plan. Call 828-256-2183.
Frequently Asked Questions
Can a bank statement HELOC cover my full private loan payoff?
Only if the line, after the lender subtracts the first mortgage and other liens from the CLTV cap, is at least as large as your payoff letter amount. The payoff includes interest and fees, not just principal.
Does the private loan balance reduce the line if it is on a different property?
No. CLTV is tested only on the property that secures the line. The private loan on another property does not reduce the line, but the payoff still has to fit under the cap. Your equity in the line’s collateral decides how large it can be.
What if an LLC holds the property or the private loan?
The line generally needs title in your personal name or a revocable living trust, subject to lender program eligibility. A property held by an LLC usually does not fit. A DSCR loan may accommodate entity ownership under its own program terms, so that route can be worth testing.
Do I need 12 months of statements, or 24?
Programs commonly ask for 12 to 24 months of personal or business statements, and each lender sets its own requirement. The lender subtracts an expense factor it chooses and screens out transfers, loan proceeds, and unexplained deposits before averaging what is left.
Is a DSCR refinance a better way to retire a private loan?
Sometimes. A DSCR loan that covers only the payoff and closing costs is typically treated like a rate-and-term refinance, with leverage up to about 85% LTV on a rate-and-term refinance. It qualifies mainly on rent coverage. The line suits borrowers whose deposits are strong and whose rents are not.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
Many investors treat hard money as the acquisition tool and plan the exit up front – see the hard money exit refinance program.
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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. Academy Bank – Understanding loan-to-value ratio and how to calculate it
2. NerdWallet
3. Scotsman Guide – Rev Up the Engine for Non-QM Lending
4. CFPB
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Hard Money Cash-Out Refinance Program to Pay Off a HELOC on a Rental Property · DSCR HELOC Requirements With One Year of History · DSCR HELOC Requirements for Lincoln County MO Investors
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.