Banks That Offer a HELOC to Pay for a Home Improvement Project

The Quick Read: Many banks and credit unions sell a home equity line for renovations, but the line is secured by the home you are improving, and the lender sets the limit from your equity, credit, and debt load, so the right fit depends on whether the property is your residence, a second home, or a rental.

• Across Lendmire’s wholesale network, a primary-residence line can reach 90% combined loan-to-value (CLTV, meaning your first mortgage plus the new line measured against the home’s value) at a 720 credit profile, on lines up to $500,000.
• An investment-property line tops out at 70% CLTV, needs at least a 700 credit profile, and caps at $500,000.
• At least 75% of the line is drawn at closing, so these lines suit one defined project better than slow, open-ended work.
• On this network, pricing floats through both the draw period and the repayment period on both programs and never converts to fixed.
• An LLC cannot hold title on these lines. Title sits with you personally or in a revocable living trust.

Which Banks Offer This, and How Do You Pick?

Large banks, credit unions, and online lenders all sell home equity lines. Each sets its own equity rules, credit floors, and property restrictions, and many tighten those rules sharply when the home is a rental. The best program for your situation depends on occupancy, credit profile, how much leverage you need, and how the title is held.

Lendmire is a mortgage broker, not a lender. It works with a network of wholesale HELOC lenders and matches a file to the program whose guidelines fit it. That matters because the programs differ in real ways. One wholesale program allows higher combined exposure, and another offers longer interest-only runways. This article calls them the higher-leverage program and the longer-runway program, and it labels each figure that applies to only one of them.

A home equity line of credit (HELOC) is a revolving credit line secured by your property. You borrow against the equity, which is the home’s value minus what you owe. Lendmire’s DSCR programs run across 41 markets, including Washington, D.C. The HELOC programs described here are available only in Lendmire’s 16 full-service states, so availability is narrower.

Key Terms Defined

• Draw period: the stretch of time when you can take money from the line and usually pay interest only.
• Repayment period: the stretch after the draw period when you can no longer borrow and the balance amortizes, meaning each payment includes principal.
• DTI (debt-to-income ratio): your monthly debts divided by your monthly income.
• Lien position: where the loan sits in line to be repaid. A first lien is paid before a second lien.
• Vesting: how the property title is held, such as in your own name, in a trust, or in an LLC.
• DSCR (debt service coverage ratio): a rental property’s monthly rent divided by its full monthly housing payment (PITIA).
• PITIA: principal, interest, taxes, insurance, and any association dues.

How Does a Renovation HELOC Work, Step by Step?

A renovation HELOC moves through five steps: an equity test, a valuation, an income and credit review, the draw period, and the repayment period. Each step can stop a file. The sequence below follows how wholesale lenders on this network review a standard request.

Step 1: The equity test. The lender adds your first mortgage and the new line together, then divides by the home’s value. That is CLTV. Each credit tier has its own ceiling and its own maximum line size, as the table below shows.

Step 2: The valuation. Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal. A higher CLTV may call for a secondary valuation. Every line above $500,000 needs a full appraisal, and you may request one on any line.

Step 3: Credit and income. The program uses a single-bureau score tied to the primary wage earner. The report can be no more than 90 days old at closing, and rescores are not allowed. DTI is capped at 50%. Profiles from 600 to 679 are held to a lower cap of 45%, so a ratio above 45% is possible only at a 680 credit profile or better. The lender reviews your file on the interest-only payment calculated on the maximum draw, not on what you plan to draw.

Step 4: The draw period. The Consumer Financial Protection Bureau describes a HELOC as an open-end line you can borrow against repeatedly during the draw period. Many lines require only interest payments in that window. This network offers two structures on primary residences and second homes. 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. Investment lines use the 5-year and 25-year structure only. A few states shorten the terms, so confirm for your state.

Step 5: The repayment period. Once the draw ends, payments include principal, and the payment can rise sharply. The same federal page warns that falling behind could cost you your home, so plan for the repayment payment before you draw.

What Do the Network’s Ceilings Look Like by Property Type?

The ceiling depends on how you use the property. A primary residence gets the most room, and an investment property gets the least. Each figure below is a guideline within the network, subject to lender guidelines and full file review, and it is never a commitment to lend.

The $750,000 row is the only one above $500,000, and it applies to primary residences alone. The 90% rows stop at $500,000, so a larger line trades leverage for size.

Lower tiers exist beneath those rows. A primary residence can go as low as a 600 profile at 60% CLTV, and a second home starts at 640. An investment line starts at 700, with 70% CLTV at both the 700 and 720 tiers.

A line above $500,000 requires a credit profile of 700 or better (720 on the longer-runway program), caps at 75% CLTV, and needs a full appraisal.

Market surveys report that investment-property lines can run up to 90% loan-to-value and commonly want a score near 720, according to NerdWallet. That describes the broader market. On this network, an investment line stops at 70% CLTV.

A Worked Example: A Phased Kitchen Remodel

Picture a homeowner with a primary residence, a 720 credit profile, and a kitchen remodel planned in three stages. The home is worth enough to fit the 90% CLTV tier, and the line is under $500,000.

The first problem is timing. At least 75% of the line is drawn at closing on both programs. The homeowner starts paying interest on most of the money before the contractor pours a footing. A typical bank line lets you draw as invoices arrive, but this network’s structure does not. After closing, each additional draw has a $1,000 minimum, as the longer-runway program states. The higher-leverage program does not state a subsequent-draw minimum.

The second problem is the qualifying payment. Because the lender reviews the file on interest-only payments at the maximum draw, a modest line can still use up real DTI room.

So the strongest fit is a project with a defined scope and a contractor schedule that front-loads costs. A renovation that will run long, change scope, or grow in cost is a poor match for a line that is mostly funded on day one.

Value is the other open question. An improvement may support a higher appraised value, depending on comps and underwriter review. A lender that uses an automated valuation will not credit finished work it cannot see.

Where the General Rule Breaks

The general rule is that a renovation line is secured by the home you are improving, and that home is your own. These cases bend it.

Investment properties. NerdWallet notes that a HELOC on a rental can be harder to get than one on a primary home because lenders view default risk as higher. In this network, the investment tier is the strictest: 70% CLTV, a 700 minimum, a $500,000 cap, and the 5-year draw and 25-year repayment structure only.

LLC-owned rentals. Title must sit with an individual or a revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. If your rental is already deeded to an LLC, you need a vesting change before this product works. You could also look at a DSCR cash-out refinance instead, subject to program terms.

Rental restrictions. Some bank line agreements limit renting the home to others. If you plan to house-hack or convert the property, read the agreement before you sign.

Lien order. These lines can sit in first or second lien position. Many DSCR lenders want first position on their own loan. A line already sitting on a rental generally has to be paid off before a DSCR cash-out refinance can close on that property.

Exposure limits. A borrower may hold no more than three lines. Combined exposure caps at $2,000,000 on the higher-leverage program and $750,000 on the longer-runway program. Owning more than 15 financed properties makes you ineligible.

Property types. Single-family homes, 2-4 units (a 640 minimum on the longer-runway program), PUDs, townhomes, and condos, including non-warrantable condos, are eligible. Manufactured homes, co-ops, condotels, log homes, commercial and mixed-use property, and agricultural zoning are not offered. A property listed for sale, or listed within the past 60 days, is ineligible in several states.

Credit events. A bankruptcy needs 4 years of seasoning from discharge or dismissal on both programs. Foreclosure history splits. On primary residences and second homes, one program seasons a foreclosure at 7 years and a deed-in-lieu, pre-foreclosure, or short sale at 4. The other declines that history regardless of age.

When the Investor Decision Gets Real: Line or Cash-Out?

An investor has two broad ways to pull equity for a rental renovation. One is a line on the rental or on the home they live in. The other is a DSCR cash-out refinance on the rental itself. They test different things.

A line underwrites you. A DSCR cash-out qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. For investors whose personal income is hard to document or whose DTI is already stretched, that difference decides the route. The complete DSCR loans guide walks through the full program.

On the cash-out side, about 6 months of seasoning is the common expectation, and reserves commonly run near 6 months of PITIA, though they vary by lender, leverage, loan size, and transaction type. Clearing 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Credit floors range from 620 in parts of the network to about 660 on most programs, and 700 or better opens the strongest leverage.

One caution applies to any rental. DSCR compares rent to PITIA only, so a ratio above 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital spending sit outside that math. A renovation that raises rent is helpful. A renovation that raises debt service without raising rent can lower coverage.

Investors weighing an existing equity product against a new one can also read about banks that offer a HELOC to pay off a home equity investment.

What Should You Prepare Before You Apply?

• Your credit report details, since the lender reviews one bureau score and no rescores are allowed.
• Your first mortgage balance and the home’s likely value, so you can estimate CLTV.
• A contractor schedule that shows when each cost comes due.
• Proof of how title is held, because LLC vesting stops the file.
• A count of your financed properties and open lines.
• A plan for the repayment-period payment, not just the draw-period payment.

When a HELOC Is the Wrong Tool

Skip it when your DTI is close to 50%, because the qualifying payment uses the maximum draw. Skip it when the property sits in an LLC and you do not want to move title. Skip it when you cannot absorb a floating payment that never converts to fixed. In those cases, a DSCR cash-out refinance or a smaller, defined line may fit better.

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 request a quote.

Plan your renovation budget before the first draw, because a line that is mostly funded at closing rewards a fixed scope and punishes a moving one.

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.

References

1. Consumer Financial Protection Bureau

2. NerdWallet

3. CFPB – HELOC vs home equity loan