The Quick Read: The right provider is the one whose line fits your collateral property and credit profile, and whose cash the purchase lender will accept. A HELOC is a credit line that can supply down payment cash. The lender financing the next property still applies its own equity, credit, and reserve rules.
- A HELOC does not remove the down payment. Most DSCR purchases still call for roughly 20%-25% down, and select high-leverage programs reach 15% down, subject to lender guidelines.
- On the HELOC side, the investment-property ceiling is 70% combined loan-to-value (CLTV). Primary-residence and second-home lines reach 90% CLTV, but only at 720 credit or better. On a primary residence, a 700-credit borrower reaches 85%.
- Purchase lenders split on borrowed funds. Some accept them, some cap the borrowed share, and some want part of the down payment unborrowed.
- The HELOC payment stays out of the DSCR ratio on the new property, yet it still drains real cash flow.
Why “Top Providers” Is the Wrong First Question
Ranking HELOC companies tells you little, because the decision turns on three things. The first is which property secures the line. The second is how the lender financing your purchase treats borrowed money. The third is whether the combined payments fit your budget.
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.
Lendmire is a mortgage broker, not a lender. It works with a network of wholesale HELOC lenders and matches a borrower’s situation to the program that fits. This article does not name or rank any lender, because the best program for your situation depends on your equity, credit, and goals. The sections below show what these lenders look for so you can judge a fit yourself.
What a HELOC Does and Doesn’t Do Here
A HELOC, or home equity line of credit, is a revolving credit line secured by a property you own. You borrow against your equity, which is the property’s value minus what you owe on it. The line itself does not restrict how you spend the money.
Three separate pots of cash show up on a rental purchase. They are the down payment, the closing costs, and the reserves. Reserves are the months of mortgage payments a lender wants to see left in your accounts after closing. A purchase program may accept borrowed money for one pot and not the others. Borrowed funds are commonly excluded from reserves.
A zero-down DSCR loan on the target property does not exist. The HELOC only changes where your down payment cash comes from.
Who the Top HELOC Providers Are Depends on Your Situation
Providers fall into three types, and each one fits a different borrower.
Banks and credit unions. These lenders offer lines on the home you live in, and they underwrite on your personal income and debts. Some offer lines on rentals, and some do not. Availability on investment property changes over time, so confirm it before you plan around it.
Wholesale HELOC lenders reached through a broker. A broker shops several programs and matches the file to one. The parameters in the next section come from this channel. The lines are standalone, meaning they sit in first or second lien position and do not require refinancing your existing mortgage. Lendmire’s HELOC programs are offered in 16 full-service states, a narrower footprint than its DSCR lending across 41 markets, including Washington, D.C.
DSCR-style lines on a rental you already own. These are underwritten on the rental’s rent rather than your personal income. They sit on a seasoned rental you keep, so they cannot fund a purchase directly. They fund the down payment for your next one.
Each type fits a different borrower. Compare them on collateral, income documentation, how they treat borrowed funds, and whether the line can be drawn before you sign a purchase contract.
What These HELOC Lenders Look For
The occupancy of the collateral property sets the ceiling. Keep the three tiers straight, because each occupancy type carries a different ceiling.
| Collateral | Minimum credit | Max CLTV | Max line |
|---|---|---|---|
| Primary residence | 600 | 90% (720+ only) | $500,000 at 90% CLTV; $750,000 at 75% CLTV, 700+ (720 on the longer-runway program) |
| Second home | 640 | 90% (720+ only) | $500,000 |
| Investment property | 700 | 70% | $500,000 |
Several details sit behind that table. On a primary residence, the 90% tier applies up to $500,000, and a 700-credit borrower reaches 85%. A line above $500,000 is available on a primary residence only. It requires 700 credit or better (720 on the 5-year-draw structure described below), caps at 75% CLTV, and requires a full appraisal.
Debt-to-income (DTI) matters on these lines. DTI is your monthly debt payments divided by your monthly income. The maximum is 50%. Profiles from 600 to 679 are held to 45%. The lender reviews your file on the interest-only payment calculated on the maximum draw, not on what you plan to borrow.
Lines at or below $500,000 ordinarily use an automated valuation instead of a traditional appraisal. A higher CLTV may call for a second valuation, and you can request a full appraisal at any size.
Eligible collateral includes single-family homes, 2-4 unit properties, PUDs, townhomes, and condominiums, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial and mixed-use property, and agricultural zoning are not eligible. Treat every figure here as guidance subject to lender guidelines and full file review. Review details are subject to lender overlays.
Step by Step: How Underwriting Treats a Borrowed Down Payment
Underwriting happens twice, once for the line and once for the purchase. These are the steps in order.
1. Pick the collateral. Most investors use a primary home or a rental they already own. The choice determines the ceiling in the table above and whether the lender looks at your income or the rent.
2. Size the line. Lenders typically take a percentage of the property’s value and subtract what you owe. The CFPB’s HELOC booklet walks through this using 75 percent as an illustration, which is a market-wide example and not a network ceiling. On the wholesale network, the ceiling is the CLTV in the table. CLTV is your first mortgage plus the new line, divided by the property’s value.
3. Ask the purchase lender first. Ask whether borrowed funds count toward the down payment. Ask whether any share must be your own cash, and how reserves are sourced. Get the answer in writing before you draw. Lendmire’s piece How to Use an Investment Property HELOC as a Down Payment on Another Home goes deeper on this conversation.
4. Close the line, then draw. At least 75% of the line is drawn at closing on these programs. Plan on borrowing most of it up front, and you will owe payments on the drawn amount from the start.
5. Season and document the funds. Many purchase lenders want borrowed money to sit in your account for a period before it counts. That period varies by lender, so ask for yours. Keep the draw statement and the bank statement that shows the deposit.
6. Close the purchase. The purchase lender traces the source of funds. The application asks whether any of the funds are borrowed, so the line cannot go unreported. The HELOC never waives down payment, reserve, or credit rules.
Documentation for the line also varies by borrower and program. Self-employed borrowers should expect the lender to ask what income paperwork its program accepts before they apply.
The Structures and Variations
Two wholesale structures exist for primary residences and second homes. One is a 3-year interest-only draw followed by a 17-year repayment. The other is a 5-year interest-only draw followed by a 25-year repayment, which this article calls the 5-year-draw structure. Investment-property lines run the 5-year draw structure only. The price on both floats through the draw and the repayment period and never converts to fixed.
The minimum subsequent draw after closing is $1,000 on the 5-year-draw structure.
Credit standards differ by structure. The 5-year-draw structure asks for two tradelines seasoned 12 months, or one seasoned 24 months. It requires a clean housing history applied across all financed properties. A bankruptcy needs 4 years of seasoning from discharge or dismissal on both. Foreclosure-family history splits on primary residences and second homes. One program seasons a foreclosure at 7 years and a short sale or deed-in-lieu at 4. The other declines that history entirely.
A borrower can hold up to three lines, and a borrower with more than 15 financed properties is not eligible. Combined exposure caps at $2,000,000 on the 3-year-draw structure and $750,000 on the 5-year-draw structure.
Title is the sharpest difference from a DSCR loan. The line requires an individual borrower or a revocable living trust to hold title. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot. A property already in an LLC needs a vesting change first, or a DSCR cash-out instead, subject to program terms.
Where the Rule Breaks
A fully borrowed down payment. This can fail on its own, because some programs cap the borrowed share or require unborrowed cash. It also leaves you financing close to the whole purchase price. That strains reserves and monthly cash flow even when the file technically passes.
Reserves. A draw can fund the down payment without funding the cushion. If the purchase loan needs about 6 months of PITIA in reserves, those months usually have to come from your own accounts. PITIA is principal, interest, taxes, insurance, and association dues.
Lender variation. Lenders in a wholesale network are not uniform. Some accept documented borrowed funds, which is why asking first matters.
Rental restrictions and sale of the collateral. Check whether the line’s terms restrict renting out the secured home. If you sell the secured property, expect to repay the line in full at that point.
A shrinking line. Lenders can reduce a line if the property’s value drops. A line you counted on for a later draw is not a guaranteed resource.
Properties the programs don’t take. DSCR loans in this network are not offered on manufactured homes (single- and double-wide), log homes, or barndominiums, and the HELOC programs exclude manufactured and log homes as well. Confirm property type before building a plan around it.
The Equity Math, Run in Percentages
Run the numbers on a modeled primary-home owner with 720+ credit and a first mortgage equal to 55% of the home’s value. At the 90% ceiling, the line could reach roughly 35% of the home’s value, subject to the $500,000 cap on that tier. Those are illustrative inputs, not market data.
If that home is worth about the same as the property you plan to buy, 35% of its value covers a 20%-25% down payment with room left. If it is worth half as much, it does not. Closing costs and reserves still need a source. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Now the same owner borrows against an investment property instead, with a first mortgage at 40% of value. At the 70% ceiling, the room is about 30% of value. The investment tier also requires 700 credit or better.
Three Payments, One Stress Test
After closing, you carry the first mortgage on the collateral, the line, and the new purchase loan. Test the stack before you draw.
The DSCR ratio is monthly rent divided by the monthly PITIA on the loan being underwritten. Select DSCR programs start at 1.00, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Stronger coverage opens better pricing and leverage. The HELOC payment does not enter that ratio, but the property now backs two obligations.
A DSCR above 1.00 is also not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation. Treat the ratio as one test and cash flow as a second.
On the purchase side, most DSCR files land at 75%-80% LTV on a purchase, and select programs reach 85% LTV with roughly a 700+ score. A bigger down payment shrinks the purchase loan and can lift the ratio, but it never erases leverage caps, credit floors, reserves, or property eligibility. The strongest files clear two tests: enough equity and enough rental coverage. Lendmire’s complete DSCR loans guide covers how those programs are structured. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Interest-only draw periods keep early payments low, but the CFPB’s HELOC explainer notes that repayment follows the draw period and that falling behind can cost you the home. SmartAsset’s analysis on Nasdaq makes the same point for buyers who use a line for a down payment. If the line sits on your primary residence, a missed payment puts your home at risk, not just the rental.
Which Funding Path Fits Which Investor
| Situation | Path to weigh | Watch for |
|---|---|---|
| Equity in your home, want flexibility | HELOC | Two payments, variable pricing |
| Need a single lump sum | Home equity loan | Fixed amount, second lien |
| Rental already owned, seasoned | DSCR cash-out refinance | Seasoning, leverage cap |
| Cash on hand | Pay cash down | Liquidity left for reserves |
A DSCR cash-out refinance on a standard rental tops out around 75% LTV across most of the network, with about 6 months of seasoning the common expectation. That route replaces the existing loan instead of adding a second payment. The better path depends on how you want to hold the source property. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
If you plan to sell your current home, you may not need a line at all, since sale proceeds can fund the down payment. A line fits when you want to keep the home and buy another property first.
Key Terms Defined
HELOC: A revolving credit line secured by property you own, drawn as needed and repaid in stages.
CLTV: Your first mortgage plus the new line, divided by the property’s value.
Seasoning: The time borrowed money must sit in your account before a purchase lender counts it.
Reserves: Months of mortgage payments you hold in your own accounts after closing.
DSCR: Monthly rent divided by the monthly PITIA on the loan being underwritten.
Draw period: The stretch of years in which you can borrow from the line before repayment begins.
Frequently Asked Questions
Can a HELOC cover the whole down payment on a rental?
Sometimes, but it depends on the purchase lender. Some programs accept documented borrowed funds, some cap the borrowed share, and some want part of the down payment unborrowed. A fully borrowed down payment can fail on that basis alone.
Does a HELOC on my primary home work differently from a line on a rental?
Yes. A line on a primary home is underwritten on your personal income and debts. A line on an investment property is underwritten differently and carries a lower ceiling, 70% CLTV, against 90% CLTV on a primary at 720 credit or better. Investment lines also require 700 credit or better.
Does the HELOC payment lower my DSCR on the new property?
It does not enter the DSCR ratio, which counts only the purchase loan’s payment. It still reduces your real cash flow, because you now carry both the purchase loan and the line.
Do HELOC funds count as reserves?
Commonly not. Borrowed funds are typically excluded from reserves, which run around 6 months of PITIA on many files. They vary by lender, leverage, loan size, and transaction type.
Can I hold the property in an LLC and still get the line?
Not on these programs. An individual or a revocable living trust must hold title. A property already in an LLC needs a vesting change or a DSCR cash-out refinance instead, subject to program terms.
How to Compare Your Options
Start with the occupancy of the collateral property, because it sets your ceiling. Then ask the purchase lender how it treats borrowed funds, and stress-test the full payment stack. If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Reach the team at 828-256-2183 or through the quote form.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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
3. Nasdaq / SmartAsset – How to use a HELOC for a down payment
This article is part of Lendmire’s HELOC & home equity loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get an Investment Property HELOC for a Retiree on Pension Income? · How Much Can You Borrow on a HELOC as a Widowed Homeowner on One Income? · Can You Get a HELOC Fast Enough for a Down Payment Due at Closing?
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
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.