Banks That Offer an Investment Property HELOC With a Five-Year Draw Period

The Quick Read: Few banks write a HELOC on a rental, and no national list shows which ones use a five-year draw, so the practical route is a broker that shops wholesale lenders; on Lendmire’s network an investment line runs a five-year interest-only draw, then a 25-year repayment, up to 70% CLTV and $500,000, subject to lender guidelines.

• Many depository lenders only write home equity lines on a primary residence. NerdWallet notes that not every lender offers a line on a rental and that the rules are strict.
• Five years is one lender’s product choice, not a regulatory category.
• On the network, the investment line needs a 700 credit score and is held by an individual or a revocable living trust. An LLC cannot hold title.
• The payment steps up when the draw ends, so plan the payoff or refinance before then. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

Do Banks Actually Write HELOCs on Rentals?

Some do, but access is the hard part. Community banks, credit unions, and specialty lenders are where investors usually find an answer. Each sets its own rules on property count, title, and leverage.

That is why “which banks offer this” has no clean answer. No national count exists, and any list you find goes stale. Policies change. A lender that wrote rental lines last season may have stopped.

The better question is which lenders write the structure you need, and that depends on your property type, credit profile, title, and leverage. A broker with several wholesale lenders can match those facts to a program before you spend time on applications.

What a Five-Year Draw Means

A draw period is the window when you can borrow against the line. A repayment period follows, when borrowing stops and the balance amortizes. Experian says draw periods across the broader market are typically five to ten years, followed by a repayment period of about 20 years. That is a market-wide range, not a Lendmire figure.

On Lendmire’s network, the investment property structure is narrower. It runs a five-year interest-only draw and a 25-year fully amortizing repayment. No shorter or longer option exists on investment lines. Pricing floats through both the draw and the repayment, and it never converts to fixed.

So a five-year draw is not something you shop for separately on an investment line. It comes with the program. The real decisions are whether the 70% CLTV ceiling and the $500,000 cap fit the deal, and whether the cash flow survives the step-up in year six.

How Underwriting Treats the File, Step by Step

A bank line and a wholesale-network line follow the same basic sequence. Here is how the network’s investment lines run.

1. Eligibility screen. The lender confirms the property is non-owner-occupied, checks the property type, and confirms who holds title. Title is the first place investor files stop.

2. Equity sizing. The maximum line is value times the allowed combined loan-to-value, minus the existing liens. On an investment property, the ceiling is 70% CLTV, and the line tops out at $500,000. The line can sit in first or second lien position.

3. Valuation. Because an investment line caps at $500,000, it falls in the automated valuation lane. A traditional appraisal is ordinarily not required, though a secondary valuation may be requested, and a borrower can ask for a full appraisal.

4. Borrower qualification. This is a borrower-based line, not a rent-based one. The lender reviews credit and debt-to-income. The minimum credit score on an investment line is 700, and 720 does not raise the ceiling. Maximum DTI is 50%, and the lender reviews the file on the interest-only payment calculated on the maximum draw.

5. Draw phase. You borrow within the limit. The FTC explains that you pay interest only on the amount you actually borrow, and many lines allow interest-only payments during the draw.

6. Repayment phase. Borrowing stops and payments reset to principal plus interest. Bankrate describes repayment as following an amortization schedule like a regular mortgage.

Because the 700 minimum applies to every investment line, bank-statement income is not the constraint that decides these files.

Structures and Variations

Three routes commonly come up when an investor wants cash from a rental or another property. They behave differently, so the table compares them.

The second-lien position is the main attraction of the line. You keep the first mortgage and its terms and add a line behind it. A cash-out refinance replaces the first lien with a larger loan. Neither is better in the abstract. The right choice depends on what the existing first mortgage carries and how much cash you need.

The third column is a different product with different risk. Your home becomes the collateral for a rental decision. Plenty of investors do it, but it belongs in a separate decision.

Where the General Rule Breaks

The structure above is clean on paper. These are the points where files break.

Title held in an LLC. This is the sharpest difference from a DSCR loan. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title on the network’s investment line. A property already deeded to an LLC needs a vesting change, or the owner uses a DSCR cash-out refinance instead. Moving title can affect an existing first mortgage, so get counsel’s input before re-vesting.

Ineligible property types. Manufactured homes, co-ops, condotels, log homes, commercial and mixed-use properties, and agricultural zoning are not offered. Single-family, 2-4 unit, PUD, townhome, and condominium properties, including non-warrantable condos, are eligible.

Exposure limits. A borrower can hold at most three lines. A borrower with more than 15 financed properties is not eligible, so investors with large portfolios should count their financed properties before applying.

Listed properties. In several states, a property listed for sale, or listed within the past 60 days, is ineligible. Check that before you pull the line in a sale-or-hold decision.

Credit history. A bankruptcy needs four years of seasoning from discharge or dismissal. Foreclosure history on investment files follows a seven-year path, with four years for a deed-in-lieu, pre-foreclosure, or short sale.

Lender-side changes mid-draw. The FTC says a lender that is paid as agreed cannot close the account or change the terms. It may stop advances under certain contract conditions that are spelled out in the agreement. Read those conditions before relying on undrawn capacity.

Availability. The HELOC program is available only in Lendmire’s 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than the 41-market DSCR footprint, which covers 40 states plus Washington, D.C.

What Happens in Year Six

The CFPB warns that HELOC payments often rise significantly when repayment begins, and that rates are usually variable. On a rental, that step-up lands on a property that also carries taxes, insurance, vacancy, and repairs.

At the end of the draw, the balance has not shrunk. Interest-only means you owed the same principal on day one of year six as you did on the last day of year five. Principal now amortizes over 25 years, so the payment steps up. Experian adds that some lines end in a balloon, where the full balance is due when the draw ends. Confirm that your line does not.

Run a checklist before the draw closes:

• Model the fully amortizing payment against rent after vacancy, taxes, and insurance, not against rent alone.
• Decide whether you will pay the balance down during the draw instead of leaving it flat.
• Price a refinance of the line into a DSCR cash-out refinance, which resets the whole first lien.
• Confirm that title and your credit profile will still fit program rules at that point.
• Keep a path to sell or refinance if the property’s value has dropped.

Do this planning early, not in the last months of the draw. A line that was comfortable at interest-only can become tight when principal starts to amortize.

Where DSCR Fits Instead

If the property is held in an LLC, or you need more than 70% CLTV, a DSCR cash-out refinance is the usual alternative. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Cash-out refinances top out around 75% LTV on standard rentals, with about six months of seasoning commonly expected. Coverage of 1.00 is where many select programs start. A separate select-lender path goes below 1.00, with leverage and terms adjusted.

Keep one limit in mind. DSCR compares rent to the full monthly obligation of principal, interest, taxes, insurance, and association dues. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, and utilities sit outside the ratio. For the full mechanics, see Lendmire’s complete DSCR loans guide.

A related Lendmire piece looks at investment HELOCs with minimal payments during the draw period.

Key Terms Defined

Draw period. The window when you can borrow against the line, usually with interest-only payments on what you have drawn.

Repayment period. The phase after the draw, when you can no longer borrow and the balance amortizes with principal and interest.

CLTV. Combined loan-to-value, which adds every lien on the property, including the new line, and divides by the property’s value.

Interest-only. A payment that covers interest on the drawn balance but does not reduce principal.

Balloon. A structure where the full remaining balance is due at the end of a set term.

Vesting. How title to the property is held, whether by an individual, a trust, or an entity.

Questions to Ask Before You Apply

• Do you write lines on non-owner-occupied property at all?
• Can an LLC hold title, or must it be an individual or revocable trust?
• What is the maximum CLTV on investment property, and the maximum line?
• How many rental properties or open lines will you allow a borrower to hold?
• Does the draw convert, balloon, or recast, and can the lender freeze or reduce the line?
• Is a full appraisal required, or does an automated valuation apply?

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. Lendmire is a mortgage broker, not a lender, and arranges financing through select wholesale partners. Nothing here is a commitment to lend.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges home equity lines of credit in its 16 full-service states through wholesale lenders, on primary residences, second homes and investment properties. Every line is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. NerdWallet – HELOC on an investment property

2. Experian – Draw period on a HELOC

3. FTC – Home equity loans and home equity lines of credit

4. Bankrate – What happens when your HELOC draw period ends

5. CFPB: What Is a Home Equity Line of Credit HELOC