The Quick Read: Large retail banks, credit unions, and other depository lenders do write home equity lines that investors draw on for a down payment, but no single bank list settles it, because two separate approvals decide the outcome: the line itself, and then the purchase lender that decides whether borrowed funds count.
- On an investment property, the ceiling across Lendmire’s wholesale network is 70% combined loan-to-value (CLTV), with a 700 minimum credit profile and a $500,000 maximum line.
- On a primary residence, the ceiling reaches 90% CLTV, and only at a 720-or-better credit profile.
- Approval of the line does not approve the purchase. Ask the purchase lender whether borrowed funds count before you draw.
- DSCR compares rent to the property’s monthly payment. It ignores the line’s payment, but your bank account does not.
- These lines are available through Lendmire in 16 full-service states, a narrower footprint than its 41-market DSCR platform.
Why a Bank List Is Only Half the Question
A search for banks that offer a HELOC usually ends with a list of names. A name is the wrong thing to chase, because bank appetite for equity lines changes often and depends on the borrower. The lenders that write these lines depend on your equity, credit, and which property secures the line.
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.
Two approvals sit side by side:
1. The line. A lender underwrites your equity, credit, and debt load. This must close first.
2. The purchase loan. A DSCR or investor lender decides whether the cash in your account is acceptable down payment money.
Clearing the first does not clear the second. That is why the useful question is not which banks offer a line. It is which line fits a purchase lender that will accept the proceeds.
Lendmire is a mortgage broker. It works with a network of wholesale HELOC lenders and matches a scenario to the program that fits it. It does not lend. The best program for your situation depends on the property, credit profile, combined leverage, and documentation. A broker that shops several wholesale lenders can compare those programs side by side.
How the Plan Works, Step by Step
The idea is simple. You borrow against equity you already hold in a home. You use the cash as the down payment. Your brokerage account stays invested.
Keeping the portfolio invested is the point. Nasdaq’s coverage of HELOC down payments notes that a line lets a buyer leave cash and investments in place. Yahoo Finance adds that the funds can cover the down payment, closing costs, or other expenses up to the approved limit.
The sequence runs like this:
1. Choose the collateral. The line sits on a primary residence, a second home, or an existing rental.
2. Calculate usable equity. Take the home’s value, multiply by the lender’s CLTV ceiling, and subtract what you owe. The CFPB’s HELOC booklet describes the same logic: the limit is a percentage of appraised value less debt owed.
3. Close the line before you shop. The purchase lender will want a finished loan, not a pending application.
4. Draw the cash into your own account. Do this before the purchase file starts, so the deposit has a clear paper trail.
5. Document the funds. Keep the line agreement, the draw record, and the statements showing the deposit.
6. Submit the purchase file. The DSCR lender reviews the property, your credit, and your sources of funds.
7. Plan the payoff. Most investors plan to pay the line down from rent, a refinance, or other proceeds.
A practical point on step five: the purchase lender may ask where large recent deposits came from. Having the draw documented ahead of time keeps that simple.
What Wholesale HELOC Lenders Look For
The figures below are guideline ranges for Lendmire’s wholesale network. Every figure is subject to lender guidelines and full file review. Pricing on these lines floats and does not convert to a fixed figure. Lines are available only in Lendmire’s 16 full-service states.
| Factor | Investment property | Primary residence or second home |
|---|---|---|
| Max CLTV | 70% | Up to 90% (720+ credit only) |
| Minimum credit | 700 | 600 program floor (second homes 640) |
| Line size | $25,000 to $500,000 | $25,000 to $750,000 (primary residence only above $500,000) |
| Draw structure | 5-year interest-only draw, 25-year repayment | 3-year draw/17-year repayment, or 5-year draw/25-year repayment |
A few mechanics matter more than the table suggests.
Investment lines top out at 70% CLTV. Credit above 700 buys eligibility, not extra leverage. A 700 and a 740 both reach the same ceiling.
Primary-residence lines carry the higher ceilings. The 90% CLTV tier exists only at 720 or better, so a borrower below that credit profile should expect a lower ceiling. Lines above $500,000 are primary-residence only, cap at 75% CLTV, and require a full appraisal.
At least 75% of the line is drawn at closing. The line is not a quiet reserve you leave untouched. You start carrying interest on most of it right away, so plan the down payment around the cash drawn at closing.
Debt-to-income (DTI) still counts. The maximum is 50%, and it is 45% for credit profiles from 600 to 679. Lenders review your file on the interest-only payment calculated on the maximum draw.
Valuation is usually automated. Lines at or below $500,000 ordinarily use an automated valuation with no traditional appraisal. You can request a full appraisal in any case.
The borrower must hold title personally. Title must sit with you or your revocable living trust. An LLC, corporation, or land trust cannot hold title on these lines. If your rental is already deeded to an LLC, a vesting change or a DSCR cash-out refinance may fit better. Lendmire’s guide to pulling equity out of a rental with a cash-out refinance covers that route.
Credit is reviewed on one report. The score model is single-bureau and keyed to the primary wage earner. A bankruptcy needs 4 years of seasoning from discharge or dismissal.
Where the General Rule Breaks
The plan sounds clean. These are the places it stops working.
Investment-property lines are scarce and tight. Benzinga’s overview of HELOCs on investment properties notes the collateral is the rental itself. Within Lendmire’s network, an investment line is capped at 70% CLTV and $500,000. A primary home can reach higher ceilings, with 90% CLTV available only at a 720-or-better credit profile.
First-time investors have nothing to borrow against. No existing equity means no line. This strategy suits investors who already own.
Ineligible properties. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not eligible as collateral. A property listed for sale, or listed within the past 60 days, is ineligible in several states.
Exposure limits apply. A borrower is limited to three lines. An investor owning more than 15 financed properties is not eligible.
The line can change before you close. Lenders can reduce or freeze a line if home values fall. If that happens before the purchase closes, the plan can unravel. Because at least 75% of the line is drawn at closing, most of the cash is secured from the start.
Borrowed money is not treated the same in every bucket. Down payment, closing costs, and reserves are separate tests. A lender may accept borrowed funds for one and refuse them for another. Programs differ, and the answer depends on the purchase lender and the file. Ask for the answer in writing before you pull the cash.
A fully borrowed down payment means two loans against one rent stream. The DSCR ratio ignores the line’s payment. Your actual cash flow does not.
How the Purchase Loan Treats the Money
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.
The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The ratio is monthly rent divided by principal, interest, taxes, insurance, and any association dues (PITIA). Lendmire’s complete DSCR loans guide walks through the formula in more detail.
Here are the ranges that matter when the down payment comes from a line:
- Purchase leverage: most files land at 75% to 80% LTV, which means 20% to 25% down. Select programs reach 85% LTV, or 15% down, at roughly a 700+ credit score.
- Coverage: 1.00 is where select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
- Credit: a 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest tiers.
- Reserves: commonly around 6 months of PITIA, though this varies by lender, leverage, loan size, and transaction type.
A larger down payment lowers the new loan and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Clearing 1.00 is also not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. So does the payment on the line you drew.
Consider an investor who draws most of the down payment from a line. Rent covers the new loan at about 1.2x. That looks comfortable. But the investor now pays the line’s interest-only payment, which floats, while rent stays fixed. The ratio held up, and the monthly budget got tighter. Check both numbers before you commit.
Lendmire’s piece Banks That Offer a Bank Statement HELOC to Buy a Rental Without Selling Investments covers the self-employed version of this strategy.
Borrowing Against the Home or Selling Investments
The sale-versus-borrow question comes down to what each route costs and risks. The table compares the routes in general terms.
| Route | What secures it | Main risk |
|---|---|---|
| HELOC on your home | The home’s equity | Home at risk if payments stop |
| HELOC on a rental | The rental itself | Tighter caps, scarcer lenders |
| Sell investments | Nothing | Lose market exposure |
| Borrow against portfolio | The securities | Value drops can force repayment |
Selling investments ends the debt question but also ends your market exposure. A line keeps the portfolio working, but it adds a variable payment and puts a property at risk. The CFPB warns that falling behind on a HELOC could cost you the home.
If your investments fall in value while you carry the line, you still owe the line. That is the real stress test. Ask whether you could cover the line’s payment, the new loan’s payment, and a vacancy at the same time.
Borrowing tends to fit an investor with strong equity, steady income, and a rental that clears its coverage with room to spare. Selling may fit better when equity is thin or the budget is already tight.
Key Terms Defined
HELOC: a revolving line of credit secured by property. You borrow up to a limit during a draw period, then repay over a set schedule.
CLTV (combined loan-to-value): your first mortgage plus the new line, divided by the property’s value.
DSCR: the debt service coverage ratio, which divides a property’s monthly rent by its monthly payment.
PITIA: principal, interest, taxes, insurance, and any association dues. It is the payment the DSCR ratio uses.
Source of funds: the paper trail showing where your down payment cash came from.
Seasoning: the waiting period a lender wants before it treats funds or a property as settled.
Reserves: liquid money left after closing, usually counted in months of PITIA.
Frequently Asked Questions
Can I use a HELOC for a down payment on a rental property?
Often yes, but the purchase lender makes that call, not the line’s lender. Many investors draw a line on a primary home and use the cash as down payment. Acceptance depends on the purchase program and on whether the draw is documented. Ask before you draw.
Which banks offer a HELOC for this purpose?
That depends on your equity, credit, and the property, so a fixed bank list would mislead you. Large retail banks, credit unions, and other depository lenders all write these lines, with different appetites. A broker like Lendmire shops multiple wholesale lenders and matches the scenario to a program. Availability through Lendmire is limited to its 16 full-service states.
Can I take a HELOC on the rental I want to buy?
Not for the purchase itself. A line needs an existing property with equity. A new rental needs its own purchase loan. You can later open a line on it, but an investment-property line caps at 70% CLTV and $500,000 in Lendmire’s network.
Does the HELOC payment count against my DSCR?
Generally no. DSCR compares rent to the new property’s PITIA. But the purchase lender still reviews credit and sources of funds, and your own cash flow has to cover both payments.
Can an LLC hold the HELOC?
No. On Lendmire’s network, title must sit with you or your revocable living trust. LLCs, corporations, partnerships, and land trusts cannot hold title on these lines, subject to lender program terms.
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. You can reach the team at 828-256-2183 or request a quote. Any illustrative calculator estimate is only a starting point, and every file is underwritten individually. This is not a commitment to lend.
Investors who sequence this well draw on one asset and let another keep growing. Those who rush it end up with a line, a loan, and a rent check that has to cover both.
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.
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
1. Nasdaq – How to use a HELOC for a down payment
2. Yahoo Finance – HELOC for a down payment
4. Benzinga – HELOCs on investment properties
5. The CFPB
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: Banks That Offer a DSCR HELOC for a Rental Condo Second Lien · Banks That Offer an Investment Property HELOC to Cover a Down Payment on Another Home · Banks That Offer a DSCR HELOC for Investors Buying More Rentals
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.