Banks That Offer a HELOC When Replacing a Traditional Mortgage With a First-Lien HELOC

The Quick Read: Few banks write this product, and fewer write it on a rental property. A first-lien HELOC is a revolving credit line that pays off your old mortgage at closing and takes first position. Which lender fits depends on your occupancy, credit profile, property type, and how the title is held.

• A first-lien HELOC is a standard equity line. It sits in first position because the old mortgage is paid off and released.
• Pricing floats and never converts to fixed, so you give up any fixed payment you have today.
• On an investment property, the network ceiling is 70% combined loan-to-value, with a 700 minimum credit score and a $500,000 maximum line.
• Primary residences and second homes get more room. Investment properties get the tightest box.
• LLC-held rentals cannot use this product. Title must sit with you or your revocable living trust.

Lendmire is a mortgage broker. It places these files with select wholesale lenders, subject to lender guidelines. It is not the lender, and it does not name banks, because the right fit changes with each file.

What a First-Lien HELOC Actually Is

A first-lien HELOC is the same product as any home equity line. The only difference is lien position, which comes from recording order. Nothing is recorded ahead of the line, so it is first. That happens when the property is free and clear, or when the line pays off the old mortgage at closing.

The product is open-end credit. It lets you borrow against equity repeatedly. The CFPB’s HELOC page describes the draw period, when you can pull funds up to the limit. Equity is simply the home’s value minus what you owe.

A traditional mortgage is different. It is a closed-end loan funded once, with a fixed schedule. A first-lien HELOC funds a line, and you decide how much to use.

Key Terms Defined

CLTV (combined loan-to-value): All loans against the property, divided by its value. With a first-lien HELOC, the line is the only loan, so it equals the line’s LTV.

Draw period: The stretch when you can borrow from the line, usually paying interest only.

Repayment period: The stretch after the draw ends, when the balance amortizes fully.

Lien position: Your lender’s place in line for repayment, set by recording order.

Vesting: The name on the property’s title, such as an individual, a trust, or an LLC.

DSCR loan: A business-purpose investor loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.

Which Banks Offer This? (Honest Answer: Few)

Most banks never write it. NerdWallet notes that a HELOC on an investment property is possible, but not all lenders offer one and the requirements are strict. Lenders see more default risk on rentals, and they may ask for multiple appraisals.

Your current bank is rarely the answer. Large retail lenders mostly aim first-lien lines at owner-occupied homes. Depository institutions often pair them with checking-account features. Rental versions are a narrow slice.

So this article names no banks. A list would go stale, and it would send you to lenders that may not fit your file. Lendmire works with a network of wholesale HELOC lenders, and the program that fits depends on your property type, credit, leverage need, and documentation. A broker shops several at once. You do not have to cold-call one bank at a time and hear no.

Availability has a boundary too. Lendmire places these lines only in its 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 its 41-market DSCR footprint.

How Underwriting Treats a First-Lien Replacement

Underwriting runs like a refinance. Here is the sequence.

1. Equity sizing. The line must cover your payoff plus any cash you want available. The lender caps the line against combined leverage.

2. Valuation. Lines at or below $500,000 ordinarily use an automated valuation instead of a traditional appraisal. A higher CLTV may call for a second valuation. A full appraisal is required above $500,000, and you can request one anyway.

3. Title search. The search confirms nothing else sits ahead of the new line.

4. Credit and debt ratios. Credit is read from a single-bureau score tied to the primary wage earner, and the report can be no more than 90 days old at closing. Debt-to-income tops out at 50%, but scores of 600 to 679 are held to 45%, so anything above 45% needs a 680 minimum. The lender reviews your file on the interest-only payment calculated on the maximum draw.

5. Closing and payoff. At least 75% of the line is drawn at closing. The old mortgage is paid off and released, and the new lien records first.

Notice the review basis. A DSCR loan reads the property’s rent against its payment. This product leans on you: your credit, your debt ratio, your vesting. That is the real trade-off, and it is why the complete DSCR loans guide matters if scaling a rental portfolio is the goal.

The Structures That Exist

Lendmire’s wholesale partners offer two draw structures on primary residences and second homes.

Tennessee shortens both: 3-year/12-year and 5-year/10-year. Investment lines run the 5-year draw and 25-year repayment structure only.

On both, pricing floats through the draw and the repayment period. It never converts to fixed. The CFPB brochure notes HELOCs typically carry variable rates.

Each line is first or second lien, standalone. A borrower can hold up to three lines, and those lines share one exposure cap: combined exposure tops out at $2,000,000 on the higher-leverage program and $750,000 on the longer-runway program. Separately, a borrower with more than 15 financed properties is not eligible.

Leverage by Occupancy

Occupancy decides everything. Pick the right row for your property.

On an investment property, the ceiling is 70% CLTV at 700 or 720 and above, with no higher tier. On a second home, 85% applies at 680 to 719, 80% at 660, and 75% at 640. On a primary residence, 90% CLTV reaches only $500,000 and requires 720 or better.

Market surveys report that cash-out refinances on investment property usually top out at 70% to 75% of equity, per NerdWallet. On this network, an investment-property line holds at 70% CLTV.

Texas primary residences are homestead properties capped at 80% combined loan-to-value. Texas second homes and investment properties follow the standard tables.

Where the Rule Breaks: Edge Cases

LLC title. Only individuals and revocable living trusts can hold title. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot. If your rental is already deeded to an LLC, you need a vesting change or a DSCR cash-out refinance instead. That is the sharpest structural difference from DSCR.

Property type. Single-family, 2-4 units, PUD, townhome, and condo (including non-warrantable) are eligible. The 2-4 unit option needs a 640 minimum on the longer-runway program. Modular factory-built homes work on that program only. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not offered.

Derogatory credit. A bankruptcy needs 4 years of seasoning from discharge or dismissal. On investment files, a foreclosure needs 7 years, and a deed-in-lieu, pre-foreclosure, or short sale needs 4. On primary residences and second homes, one program applies the same seasoning while the other declines foreclosure history entirely.

Listed properties. A property listed for sale, or listed within the past 60 days, is ineligible in NC, PA, TN, TX, and WA.

A shrinking line. The CFPB says a lender may stop further advances if the home’s value drops significantly. Your undrawn availability can be cut. A funded mortgage balance cannot.

Should You Replace Your Mortgage?

Run the decision in order.

1. Who holds title? If an LLC, stop. This product is out.

2. What is the occupancy? An investment property lands at 70% CLTV, 700 credit, and a $500,000 line cap.

3. Is your current mortgage fixed? You would trade a known payment for a floating one that never converts. If your fixed loan is in good shape, that is a real cost.

4. Do you need a reusable line, or one lump sum? A line serves staged projects. If you want a single payout, a cash-out refinance fits better, and so does a DSCR cash-out when the rent carries the file.

5. Can you carry the payment as the pricing moves? Float exposure hits you after the interest-only draw ends and amortization begins.

This is not for borrowers with thin cash flow, or for anyone who needs payment certainty. DSCR clears when rent covers the payment, but clearing it does not mean positive cash flow, since repairs, vacancy, and management sit outside the calculation.

The two structures solve different problems.

How to Verify a True First-Lien Product

Marketing language is loose. Before applying, ask the lender four things:

• Will the old mortgage be paid off and released at closing, with my line recorded first?
• Does the product allow my occupancy and property type?
• What are the draw and repayment periods, and does pricing ever convert to fixed?
• What is the minimum draw at closing?

Here the answer should be at least 75% of the line. After closing, the minimum subsequent draw is $1,000, except in Texas at $4,000, on the longer-runway program. The higher-leverage program does not state subsequent-draw minimums.

What to Prepare

• Your title documents, showing individual or revocable-trust vesting.
• A current payoff statement from your existing servicer.
• Proof of insurance on the property.
• Credit and debt information for the full file, including every financed property.
• Housing history. On the longer-runway program, it must be 0x30x6 and 1x30x12 at 640 and above, and 0x30x12 from 600 to 639, applied across all financed properties.
• Two tradelines seasoned 12 months, or one seasoned 24, on that same program.

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. Call 828-256-2183 or request a quote.

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. FedLaws – First lien position HELOC

2. The CFPB’s HELOC page

3. NerdWallet – HELOC on investment property

4. CFPB – HELOC brochure