The Quick Read: No single provider is best for everyone, because the right line depends on which property secures it, your credit profile, and how much combined leverage you can carry. A broker shops several wholesale lenders and matches your file to the program that fits. Your equity line and your purchase loan are approved separately, and both have to work.
- The ceiling depends on the property that secures the line. Investment-property lines top out at 70% combined loan-to-value (CLTV). Primary-residence and second-home lines reach 90% CLTV only at a 720-or-better credit profile.
- Line sizes run from $25,000 to $750,000, and the upper end is reserved for primary residences. Each program also caps how much total exposure one borrower can carry across lines.
- The purchase lender decides whether borrowed down payment funds are acceptable, and programs differ on how much borrowed money they allow.
- You carry up to three payments at once: your first mortgage, the line, and the new loan. Budget for all three before you draw.
- A line works best with an exit plan, such as paying it down or refinancing.
Why a Ranked List of Providers Does Not Exist
No honest ranking exists, because the best provider depends on your situation. A line that suits a borrower with a primary home and a 740 score may be unavailable to a borrower borrowing against a rental. Lender lists also treat second-property use as a side note.
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. It works with a network of wholesale HELOC lenders, and it does not lend. So this article does not name or rank any bank, credit union, or lender. It covers what these lenders look for, how their programs work, and who fits.
The practical question is which program matches your property, credit, and goal. The sections below give you the numbers to answer it. For the purchase side, the complete DSCR loans guide covers how the new loan is reviewed.
How the Two-Loan Sequence Works
You run two separate approvals, one after the other. The equity lender never sees the purchase file, and the purchase lender decides what to do with the funds you bring. Homeowners can generally tap equity in a primary residence for a down payment or closing costs on an investment property, as Yahoo Finance explains for second homes and rentals.
1. Pick the collateral. The line is secured by your primary home, a second home, or an existing rental. Equity is the property’s value minus what you owe.
2. Check the combined ceiling. Lenders cap total borrowing against the property as a percentage of value. That cap is the CLTV.
3. Apply and close the line. The lender reviews your credit, debts, and property value. Lines at or below $500,000 ordinarily run an automated valuation. Above that, a full appraisal is required.
4. Draw and document. Most of the line is drawn at closing on the programs in the network. Move the money into your account and keep a clean paper trail.
5. Confirm the purchase lender’s rules first. Ask whether the program accepts a documented draw, caps the borrowed share, or wants some seasoned cash of your own. Settle this before you open the line.
6. Close the purchase. A DSCR purchase loan is reviewed mainly on whether the new property’s rent covers its payment, subject to lender guidelines.
Timing matters here. Sequence the line before you go under contract, so the funds are documented and sitting in your account.
Which Property Secures the Line?
The collateral decides your ceiling, credit floor, and structure. Investment-property lines are the tightest. Primary-residence lines have the most room.
| Collateral | Max CLTV | Minimum credit | Draw structure |
|---|---|---|---|
| Primary residence | 90% (only at 720+) | 600 floor | 3-year or 5-year draw |
| Second home | 90% (only at 720+) | 640 | 3-year or 5-year draw |
| Investment property | 70% | 700 | 5-year draw, 25-year repayment |
The two draw structures on primary and second homes work like this. One has a 3-year interest-only draw followed by a 17-year repayment. The other has a 5-year draw followed by a 25-year repayment. The 3-year and 5-year options shorten in Tennessee. Investment lines use the 5-year draw and 25-year repayment only. Each quoted figure belongs to its own program’s structure.
Second-home credit tiers step down as score drops: 90% at 720+, 85% at 700 and 680, 80% at 660, and 75% at 640. The line cap holds at $500,000 at every tier.
Borrowing against a rental has a trade-off. A rental-property line is harder to find, and the risk then attaches to the rental. Benzinga notes the pricing can run higher than on a primary residence, and that foreclosure risk then sits on the rental. Investment-property HELOCs can be scarce at big banks. A broker with several wholesale lenders can look for a fit.
What These Lenders Look For
Equity lenders in the network look at credit, debt load, property type, and how the property is titled. Programs differ, and every file is underwritten individually. These are the main factors.
Credit. The program floor is 600, using a single-bureau score keyed to the primary wage earner. The report can be no more than 90 days old at closing, and there are no rescores. Second homes floor at 640, and investment lines at 700. Sub-640 profiles are limited to single-family primary residences with a clean 12-month housing history.
Debt-to-income. The maximum is 50%, and 45% for credit profiles from 600 to 679. A ratio above 45% requires a 680 minimum. The lender reviews your file on the interest-only payment calculated on the maximum draw, not on what you plan to use. A big unused line still counts against you.
Property type. Eligible types include single-family, 2-4 units (640 minimum on one program), PUD, townhome, and condominium, including non-warrantable condos. Modular factory-built homes are eligible on one program only. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not eligible.
Credit history. A bankruptcy needs four years of seasoning from discharge or dismissal. Foreclosure-family history differs by program. One program seasons a foreclosure at 7 years and a deed-in-lieu, pre-foreclosure, or short sale at 4. Another declines the history entirely.
Title. Individuals and revocable living trusts can hold title. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot. This is the sharpest difference from a DSCR loan, which can often close in an entity name, subject to lender program eligibility. A rental already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead.
Exposure. You are limited to three lines. Combined exposure across them is capped by program, from $750,000 to $2,000,000. A borrower with more than 15 financed properties is not eligible.
Availability. The line product is available in Lendmire’s 16 full-service states. That is narrower than the 41-market DSCR footprint.
How the Purchase Lender Treats Borrowed Down Payment Funds
Whether the DSCR lender accepts borrowed funds varies by program. Across the wholesale network, some programs accept a documented line draw as the down payment. Others cap the borrowed share or want a portion in seasoned funds of your own. Ask before you draw.
Reserves are a separate question. Many programs do not count borrowed funds toward reserves. Reserves are commonly around 6 months of PITIA, which is principal, interest, taxes, insurance, and any association dues. Conservative rate-term files at modest leverage under $1,500,000 can see reserves waived, and loans above that size typically step up to about 9 months. The numbers vary by lender, leverage, loan size, and transaction type.
Here is the leverage trap. Purchase leverage on DSCR files usually lands at 75% to 80% LTV on a purchase, which means 20% to 25% down. Select programs reach 85% LTV, or 15% down, with roughly a 700+ score. If you borrow the entire down payment on an 85% purchase, you are financed at nearly 100% of the price. Many programs will not allow it.
The purchase test itself is about the new property. DSCR compares rent to PITIA only. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, utilities, and capex sit outside the calculation. Minimum coverage varies by program, and some start at 1.00. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. A larger down payment lowers the payment and can lift the ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility.
A Worked Example in Percentages and Ratios
Say your rental is worth a set amount and your first mortgage on it is about 40% of that value. Investment lines cap at 70% CLTV. That leaves up to roughly 30% of the property’s value available, before credit, DTI, and valuation checks.
Now suppose the new rental is a similar price and you buy at 75% LTV on a purchase. You need about 25% of the price down, plus closing costs. A line sized near that need fits under the 30% headroom. At least 75% of the line is drawn at closing, so interest starts on most of it right away. Size the line to the need, not the maximum.
Suppose the new property’s rent covers its own PITIA at roughly 1.2x. The purchase loan looks healthy on its own test. But the line’s payment is not in that ratio. It is a real monthly cost, and it comes out of whatever the property leaves after the other costs. Run the deal with all three payments included:
1. The first mortgage on the collateral property.
2. The line, interest-only during the draw and then fully amortizing.
3. The new property’s PITIA.
Whether a DSCR lender counts the line payment anywhere in the file is program-specific. A DTI-based loan counts it, and the equity lender’s own 50% DTI test counts it. Underwrite the deal as if every payment counts. If the rent covers the new loan but not the line too, the deal is thinner than the DSCR makes it look.
HELOC or Something Else?
A line is one of several ways to produce down payment money. Which fits depends on how much you need, how long you will hold the debt, and what you own.
| Source | Best fit | Main trade-off |
|---|---|---|
| Equity line on your home | Owners with a primary residence and equity | Floating pricing, a third payment, home as collateral |
| Cash-out refinance on a rental | Owners with seasoned rentals | Resets the loan on that rental |
| Savings | Buyers with spare cash | Drains your reserves |
| Sale proceeds | Owners trading up or out | Costs and timing of a sale |
A DSCR cash-out refinance tops out around 75% LTV across most of the network, with about 6 months of seasoning the common expectation. It can scale better than a line because it does not lean on your personal debt-to-income ratio. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
When a HELOC Is the Wrong Tool
A line can fail a plan in several ways. Check these before you commit.
The purchase program rejects borrowed funds. A 100% borrowed plan can fail on the purchase lender’s borrowed-funds rule alone. One lender’s refusal does not close every door, because programs differ, but you need to know before you draw.
Your rental sits in an LLC. The lines in the network cannot be secured by a property titled in an LLC, so a cash-out refinance on that property is usually the route instead.
Your holding period is long. A CFPB explainer describes how a line works. You can borrow up to the limit during the draw period. Then repayment begins, and lenders may set a schedule over ten or 20 years. Payments follow the balance, and falling behind can cost you the home that secures the line. The line is a second mortgage on top of your first, so a long hold with floating pricing is risky. A line is best with a plan to refinance or pay it down.
You may sell the collateral home. The CFPB HELOC booklet notes that if you sell the home, the line generally must be paid in full. That can complicate a plan to move.
You plan a prepayment-penalty loan. Some DSCR loans carry prepayment penalties. Pairing one with a short-term line makes the exit harder, because a quick refinance may trigger the penalty.
You want to scale. You are limited to three lines, and a line alone rarely funds many deals. Plan the next step before the first purchase.
Questions to Ask Before Choosing a Program
Use this checklist with any broker or lender:
- What is the maximum CLTV for my occupancy, and at what credit score?
- Is a full appraisal required, or does an automated valuation apply?
- What share of the line must be drawn at closing?
- Is the draw structure 3-year or 5-year, and what is the repayment term?
- Does the purchase lender accept this draw as the whole down payment?
- Are borrowed funds counted toward reserves?
- How is my DTI calculated: on the drawn amount or the full limit?
- Does my property type and title qualify?
The right answers vary by property, credit profile, and goal. A broker that shops multiple wholesale lenders can match your scenario to a program that fits.
Key Terms Defined
HELOC: A home equity line of credit, a revolving line secured by the equity in a property.
CLTV: Combined loan-to-value, the total of all loans on a property divided by its value.
Draw period: The stretch when you can borrow against the line, usually with interest-only payments.
DSCR: Debt service coverage ratio, the property’s rent divided by its PITIA.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly cost of the property.
Seasoning: The waiting period a lender wants before a refinance, or before funds count as your own.
Frequently Asked Questions
Can a HELOC fund a down payment on a second property?
Often, yes, if the purchase lender accepts borrowed funds. The line and the purchase loan are approved separately, and programs differ on how much borrowed money they allow. Confirm the rule before you draw.
Which property should secure the line?
That depends on what you own and what you need. A primary residence carries the highest ceiling, up to 90% CLTV at 720 or better. An investment line caps at 70% CLTV and needs a 700 score. Choose the collateral with equity that you can carry.
Do I have to tell the purchase lender about the line?
Yes. Borrowed funds are disclosed, and the purchase lender decides whether they are acceptable. Keep a paper trail of the draw and where the money went.
How does the line payment affect qualifying?
The equity lender qualifies you at up to a 50% DTI, using the interest-only payment on the maximum draw. A DSCR purchase loan reviews the property’s rent against its own payment, so the line is not part of that ratio. Whether the line shows up elsewhere in the DSCR file depends on the program.
Is a HELOC or a cash-out refinance better?
It depends on your holding period and what you own. A line suits a short bridge from a primary residence. A cash-out refinance suits an owner with seasoned rentals and a longer plan.
Next Step
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. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, 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. Yahoo Finance – HELOC for down payment
2. Benzinga – HELOCs on investment properties
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: Top Investment Property HELOC Providers Without Taking an Immediate Draw · Top Investment Property HELOC Providers to Cover a Down Payment on Another Home · Top Investment Property HELOC Providers Without Your Spouse on the Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.