The Quick Read: A 20-year draw period is the exception on rental-property lines, and big retail banks rarely write rent-qualified lines at all. The programs Lendmire places through its wholesale network use a 5-year interest-only draw period, then a 25-year repayment period and a 30-year maturity. Which program fits depends on the property, the credit profile, the equity and the leverage needed.
- The rent qualifies the line at a minimum 1.10x DSCR on a stress payment over the entire credit limit, subject to lender guidelines.
- It is a standalone second lien behind the first mortgage you keep, or a first lien on a rental with no mortgage.
- Second liens reach 70% CLTV at a 720 score or better, on lines of $50,000 to $500,000.
- The draw period is 5 years interest-only, then 25 years of repayment on a variable rate.
- It is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
Lendmire is a mortgage broker. It does not lend. It shops a network of wholesale lenders and matches the scenario to the program.
Does a 20-Year Draw Period Exist on a Rental Line?
Searchers often mix up two numbers: the length of the draw period and the length of the repayment period. Experian notes that some home equity lines do offer 15- or 20-year draw periods, but those are exceptions rather than the norm across the wider market.
Across the wholesale network, the rent-qualified line on a rental is built differently. The draw is 5 years, interest-only on the drawn balance. Then comes a 25-year fully amortizing repayment period, for a 30-year maturity. The rate is variable. Nothing in the program extends the draw to 20 years.
A longer draw would only delay the payment jump, not remove it. The CFPB explains that payments are often significantly higher once the repayment period begins. Plan for that conversion, whatever the draw length.
Why Big Banks Are the Wrong Place to Look
Large retail lenders mostly skip this product or restrict it heavily. NerdWallet says a home equity line on an investment property isn’t offered by all lenders and carries strict qualification requirements, because lenders see higher default risk.
Where a depository lender does write one, the file may turn on the borrower: personal income, debt-to-income, reserves. LLC-titled rentals may be excluded. That is lender policy, not law.
The DSCR version comes from non-bank investor channels. The rent is the qualifier. The line sits behind the first mortgage or stands alone as a first lien. The lenders that write it depend on the state, the property type and the credit tier. A broker that shops several wholesale lenders can find the one that fits.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
Key Terms Defined
DSCR: gross monthly rent divided by the qualifying payment, the ratio that shows whether the rent covers the debt.
Draw period: the stretch in which you can borrow from the line, 5 years and interest-only on this program.
Repayment period: the phase after the draw, when the line closes to new borrowing and the balance amortizes over 25 years.
CLTV: combined loan-to-value, the first mortgage balance plus the new line, divided by value. It applies to second liens.
Lien position: whether the line is paid behind a first mortgage (second lien) or stands first.
How the Underwriting Works, Step by Step
1. Structure. The line is a standalone second lien behind the 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 or a second home.
2. Rent. Rent is the lesser of the appraisal’s Form 1007 market rent and the lease, unless three months of receipts support a lease above market. A lease in place is required. A two-to-four-unit property may have at most one vacant unit.
3. The payment. The qualifying payment is principal and interest, fully amortizing, on the entire credit limit at a stressed start rate. Taxes and insurance are not part of it. A $50,000 draw on a $400,000 line is still tested as if the full $400,000 were borrowed. That makes the test tougher than the interest-only draw payment suggests.
4. The ratio. The minimum is 1.10x, subject to underwriting. On a second lien, confirm on the file how the lender treats the first-mortgage payment, since the lender’s coverage calculation governs.
5. Leverage. Match the credit score to the tier in the next section.
6. Valuation. Lines up to $400,000 use an automated valuation with a property inspection report, or a full interior appraisal. Larger lines take a full interior appraisal. Appraisal waivers are not accepted.
7. Draws. At least 80% of the line is drawn at closing, never less than $50,000 at closing. Later draws are at least $5,000 each.
Qualification is on the rental’s income: no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. The rent, lease, credit report and valuation are all documented. For the wider picture, see the complete DSCR loans guide.
Leverage Tiers
| Lien | Credit score | Maximum | Line size |
|---|---|---|---|
| Second lien | 720 or better | 70% CLTV | $50,000 to $500,000 |
| First lien | 740 or better | 75% LTV | Up to $500,000 |
| First lien | 700 to 739 | 70% LTV | Up to $500,000 |
| First lien, large line | 720 or better | 65% LTV | Above $500,000, to $1,000,000 |
These are ceilings through select programs, subject to underwriting, never offers. A declining-market flag lowers the ceiling 5 points. Philadelphia lines carry a ceiling 10 points lower.
A borrower who keeps a first mortgage can only take a second lien, which needs a 720 score. A first lien exists only on a rental with no mortgage.
Where the General Rule Breaks
Seasoning. 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).
LLC title. An LLC can hold title on this program, subject to program terms. The members sign as guarantors. A title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument.
Property types. Single-family, PUD, townhome, two-to-four units, and warrantable and non-warrantable condominiums are eligible. Rural-designated property, row homes, condotels, leaseholds, land trusts, age-restricted communities, mixed-use and commercial property are not. Neither is a property listed for sale in the prior 2 months or one with a solar lien.
Borrowers. U.S. citizens, permanent residents and non-permanent residents with a Social Security number. Foreign nationals and ITIN borrowers are not eligible.
Credit history. No 30-day mortgage late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
Exposure. A borrower is capped at 5 loans or $2,500,000 with the program. No reserves are required.
Geography. The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Texas, Virginia and Washington.
How It Compares to the Alternatives
| Product | Reviewed on | Keeps first mortgage? |
|---|---|---|
| DSCR HELOC | Rental income | Yes, as a second lien |
| Bank-underwritten rental HELOC | Borrower income and DTI | Usually |
| DSCR cash-out refinance | Rental income | No, replaces it |
A bank-underwritten line typically asks for personal income documents. A cash-out refinance replaces the first mortgage, which matters if that first mortgage is one you want to keep. If the line is the wrong fit, those are the usual alternatives.
What the Decision Looks Like
Picture an owner with a paid-off duplex held through an LLC for more than 6 months. A first lien is possible there, and a 740 score supports the top 75% LTV tier on lines up to $500,000. Now picture an owner with a mortgage and a 700 score. That owner cannot take the second lien, since the floor there is 720. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
If a 20-year draw is non-negotiable, the program here is not the match, and a different product or lender type would be the route. If revolving access to equity without touching the first mortgage is the goal, the 5-year draw and 25-year repayment are the structure to price. Plan the cash flow for the repayment conversion first.
Before applying, collect:
- the lease and recent rent receipts
- entity documents if an LLC holds title
- the first mortgage statement
- hazard insurance covering both liens, plus flood coverage where required
Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
For related reading, see Lendmire’s piece Banks That Offer a Bank Statement HELOC With a 10-Year Interest-Only Draw Period.
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. Call 828-256-2183 or request a quote.
Frequently Asked Questions
Do any banks offer a DSCR HELOC with a 20-year draw?
No verified list exists. Most large banks skip rental lines, and the 20 years in many HELOC descriptions refers to repayment. The program placed through Lendmire’s wholesale network has a 5-year draw and a 25-year repayment period.
How soon after buying a rental can I open the line?
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).
Can my LLC be the borrower?
Yes, subject to program terms. The LLC can hold title, the members sign as guarantors, and the borrowers need not match those on the first mortgage.
What happens when the draw period ends?
The line stops accepting draws and converts to a 25-year amortizing payment on the balance, and the CFPB warns payments are often significantly higher then. Bankrate adds that a zero balance at draw end typically closes the account automatically.
Is a second lien available at any credit score?
No. The second-lien cell starts at 720, with a 70% CLTV ceiling. The first-lien floor is 700, and a first lien requires a rental with no mortgage.
For current guidelines and terms, see Lendmire’s DSCR HELOC programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges DSCR home equity lines of credit on rental property in 15 of its 16 licensed states (every licensed state except Tennessee) through wholesale lenders. The line is qualified on the rental’s rent rather than the owner’s personal income, and 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.
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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. Experian – Draw period on a HELOC
3. NerdWallet – HELOC on an investment property
4. Bankrate – HELOC draw period
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 on One Rental to Buy Another Investment Property? · How Much Can You Borrow on a DSCR HELOC After the Draw Period Ends? · How Much Can You Borrow on a DSCR HELOC on Investment Property Owned by LLC?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.