The Quick Read: The right program is the one whose collateral occupancy, credit tier and combined loan-to-value ceiling match your file, because the line is drawn against a property you already own and the draw then funds the down payment, closing costs or reserves on the next purchase.
- The property that secures the line sets the ceiling: 70% combined loan-to-value (CLTV) on an investment property, and up to 90% on a primary residence or second home only at a 720 or better credit profile.
- At least 75% of the line is drawn at closing, so this is a funded draw, not a standby line.
- Bank statements document income. Credit, equity, debt-to-income and the valuation are still reviewed.
- LLCs and most trusts cannot hold title on these lines, which is the sharpest difference from a DSCR loan.
- Availability is limited to 16 states, and every figure is subject to lender guidelines and full file review.
What does a bank statement HELOC do in a home purchase?
A bank statement HELOC turns equity in a home you already own into cash for the next purchase. You open the line against the current property, draw funds, and put those funds toward the down payment, closing costs or reserves on the new one.
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.
The “bank statement” part describes how income is documented. A self-employed borrower often shows less on a tax return than the business actually earns, because write-offs shrink the number. Under the applicable program, income can be documented from 12 or 24 months of bank statements instead, subject to lender guidelines.
It is not a looser product. It is a different document path into the same underwriting.
It also does not do several things people assume:
- It does not fund a purchase by itself. The purchase still needs its own mortgage or cash.
- It does not skip the credit check, the valuation or the debt-to-income test.
- It does not carry a fixed payment. Under the programs Lendmire places, pricing floats across both the draw and the repayment period and never converts to fixed.
- It does not come without a second obligation. You now carry the line and the new purchase together.
Lendmire is a mortgage broker, not a lender. It places these files with select wholesale partners and matches the scenario to the program that fits, so the answer to “which program” depends on the borrower, the collateral and the leverage needed.
Key Terms Defined
HELOC: A home equity line of credit, a revolving line secured by a property you own, with a draw period followed by a repayment period.
CLTV: Combined loan-to-value, which adds every lien on the property together and divides by the property’s value.
Draw period: The stretch of the line when you can borrow and pay interest only; repayment then amortizes the balance.
Collateral property: The property that secures the line, which is the home you already own, not the one you are buying.
Expense factor: The share of business-account deposits a lender treats as business costs rather than income.
DSCR: Debt service coverage ratio, which compares a rental’s income to its full housing payment and tests the property instead of the borrower’s deposits.
Vesting: How title is held, whether in your own name, a living trust or an entity.
How do bank statements become qualifying income?
Lenders convert deposits to income in steps, and not every deposit counts. The process is a screening exercise, not a total of everything that hit the account.
1. Choose the account type and window. Personal-account statements and business-account statements are treated differently, and the window is usually 12 or 24 months.
2. Screen the deposits. Only income-related deposits count. Transfers between your own accounts, refunds, loan proceeds and peer-to-peer payments are pulled out, and large one-off spikes need invoices or contracts.
3. Average what is left. The eligible deposits are averaged over the chosen window.
4. Apply the expense factor. Business-account deposits are reduced by a lender-set factor that depends on the business type and structure. A CPA or tax-preparer letter can support a lower factor, but the borrower does not pick the number.
5. Test the debt load. The resulting income goes into a debt-to-income test. On these equity lines, the maximum is 50%, and a ratio above 45% requires a 680 minimum score. Profiles from 600 to 679 are held to 45%. The line is qualified on the interest-only payment calculated on the maximum draw, not on what you plan to take.
That last point trips up borrowers. The test uses the full line size, so a larger line than you need can push the ratio up before you buy anything.
Overdrafts and returned items on the statements hurt a file. Clean statements across the whole window help more than one strong month.
Which property secures the line, and why does it set the ceiling?
The occupancy of the property you borrow against is the first decision, because the ceilings differ sharply. The table below shows the three collateral tiers.
| Collateral | Credit floor | Highest ceiling | Maximum line |
|---|---|---|---|
| Primary residence | 600 | 90% CLTV at 720+ (up to $500,000) | $500,000 (above $500,000 at 75% CLTV, 700+ credit) |
| Second home | 640 | 90% CLTV at 720+ | $500,000 |
| Investment property | 700 | 70% CLTV | $500,000 |
Below the top tier, leverage steps down by credit score. On a primary residence, a 700 profile reaches 85% CLTV on lines up to $500,000. A 660 score still reaches 85% CLTV up to $500,000, while 640 reaches 80%, 620 reaches 70% and 600 reaches 60%, with the two lowest tiers capped at $400,000. On a second home, 700 and 680 both reach 85%, 660 reaches 80% and 640 reaches 75%.
On an investment property, the ceiling is 70% CLTV at any qualifying score, with a 700 minimum and a $500,000 maximum line. There is no higher tier.
A line above $500,000 is for primary residences only, up to the $750,000 program maximum. It requires a credit profile of 700 or better (720 on the longer-runway program, described below) and caps at 75% CLTV. It also requires a full appraisal.
A Texas primary residence is a homestead, so it caps at 80% combined loan-to-value, and the higher tiers above that never apply to it.
What are the two program structures?
Lendmire places equity-line files with two wholesale programs, and the figures apply only within each program’s own terms. This article calls them the higher-leverage program and the longer-runway program. Both are standalone lines, available in first or second lien position.
Two draw structures exist on primary residences and second homes:
- A 3-year interest-only draw followed by a 17-year fully amortizing repayment.
- A 5-year interest-only draw followed by a 25-year fully amortizing repayment.
Investment property lines run the 5-year draw and 25-year repayment structure only. Tennessee shortens both structures.
The longer-runway program also has tighter credit-history standards. It asks for two tradelines seasoned 12 months, or one seasoned 24 months, with housing history held to 0x30x6 and 1x30x12 at 640 and above. Credit scores come from a single-bureau model keyed to the primary wage earner, and the report cannot be more than 90 days old at closing. There are no rescores.
Line size runs from $25,000 to $750,000. After closing, subsequent draws carry a $1,000 minimum, and Texas sets it at $4,000. Combined exposure to a single borrower is limited to three lines, and a borrower with more than 15 financed properties is not eligible.
How does the purchase sequence work?
The order matters more than any single number. A file that gets the sequence wrong ends up with a line it cannot use or a purchase it cannot finish.
1. Decide the collateral. Pick the property you will borrow against and confirm its occupancy, title and eligibility before anything else.
2. Size the line to the need. Estimate the down payment, closing costs and reserves for the new purchase, and remember that at least 75% of the line is drawn at closing.
3. Document income and open the line. Statements, credit and the valuation go through underwriting. Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal, though a higher CLTV may require a secondary valuation. A borrower may request a full appraisal in any case.
4. Draw and season the funds. The purchase lender may ask where the down payment came from. Whether a given purchase lender accepts borrowed down-payment funds is a question to settle before you write an offer, not after.
5. Close the purchase. The new mortgage’s payment and the line’s payment both count in your debt load, so the purchase lender sees both.
The CFPB’s explanation of a HELOC describes the same draw and repayment pattern in general terms, and it notes that falling behind can put the home securing the line at risk. That risk concentration is the real cost of this strategy: the home you already own now backs the down payment on the next one.
Where does the general rule break?
Title held in an LLC. Fee simple or leasehold title must sit with the individual borrower or an inter vivos revocable living trust. LLCs, corporations, partnerships and irrevocable, blind or land trusts cannot hold title. If your investment property is deeded to an LLC, you need a vesting change first, or you need a DSCR cash-out instead, subject to lender program eligibility.
Rental use of the collateral. The CFPB’s HELOC booklet notes that renting your home to others may be prohibited under the terms of a line. A primary-residence line is underwritten for owner occupancy, so read the occupancy terms before you plan to rent the home out later.
Selling the collateral. The same booklet says a sale generally requires paying off the line in full. A buy-before-you-sell plan has to account for the payoff when the old home sells.
Properties listed for sale. A property listed for sale, or listed within the past 60 days, is ineligible in Indiana, North Carolina, Pennsylvania, Tennessee, Texas and Washington. That matters if the plan is to borrow against the old home while it sits on the market.
Property type. Single-family homes, 2-4 units (640 minimum on the longer-runway program), PUDs, townhomes and condominiums, including non-warrantable condos, are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agricultural zoning are not eligible. Modular factory-built homes are eligible on the longer-runway program only. Sub-640 profiles are limited to single-family residences with a clean 12-month housing history, and that restriction reaches primary residences only.
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 in 7 years and a deed-in-lieu, pre-foreclosure or short sale in 4, while the other declines the history entirely. Investment files follow the 7-and-4-year path.
Texas primary residences. They carry additional homestead rules, including a one-lien-at-a-time rule and 12-month seasoning. Texas second homes and investment properties are eligible as non-homestead transactions, and Texas properties are limited to 10 acres.
Appraisal and line reductions. The CFPB booklet lists an appraisal fee as a common upfront cost and notes that a lender may reduce a line if the home’s value falls. Plan around the possibility that the line shrinks while you are relying on it.
What does a good program fit look like?
“Best” is not a lender name. It is a match between the file and the program, and you can score your own file against a short list of criteria.
| Criterion | Why it matters |
|---|---|
| Collateral occupancy | Sets the ceiling: 70% on investment, higher on primary or second home |
| Credit tier | 90% CLTV needs 720+ on a primary or second home; investment needs 700+ at a 70% ceiling |
| Line size | Above $500,000 means primary residence, 75% cap and a full appraisal |
| Draw structure | 3-year or 5-year interest-only draw sets how long before amortization starts |
| Title and vesting | Individual or revocable trust only |
| Statement window and expense treatment | Changes how much income the lender counts |
| State availability | 16 full-service states only |
Lendmire’s equity-line availability covers Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. That is narrower than the DSCR footprint of 41 markets, including Washington, D.C.
A broker shops more than one program. One program may decline a foreclosure history that the other seasons, and one may offer the draw structure that suits your timing. That comparison is the practical advantage of working through Lendmire instead of a single lender’s product page.
Bank statement HELOC or DSCR loan: which tool fits?
The two products test different things. A bank statement line tests your deposits and personal debt-to-income. A DSCR loan tests the property’s rent against its full housing payment. Investors often use both on the same deal.
| Situation | Better fit |
|---|---|
| Need cash from a home you own | Bank statement HELOC |
| Buying a rental and want the property to carry the file | DSCR purchase loan |
| Property deeded to an LLC | DSCR cash-out refinance |
| Need a lump sum with a defined term | DSCR cash-out refinance |
| Self-employed with heavy write-offs | Bank statement documentation |
On the DSCR side, the purchase terms across most programs in the network land at 75% to 80% LTV, or 20% to 25% down, and select programs reach 85% LTV with roughly a 700 or better score. Coverage of 1.00 is where select programs start, and stronger ratios open better leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Most programs want a score around 660, though a 620 floor exists in parts of the network. Reserves commonly run around 6 months of PITIA, but they vary by lender, leverage, loan size and transaction type.
Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities and capital expenses sit outside the calculation.
A cash-out refinance on the DSCR side tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation. For more on how those loans work, see the complete DSCR loans guide. A standard, fully documented version of the same idea is covered in Lendmire’s piece Best HELOC Program to Buy a New Home. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What does a worked scenario look like?
Consider a self-employed borrower with a 690 credit score who owns a primary residence with substantial equity. The borrower wants to buy a rental and put 25% down. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The borrower’s tax returns show low net income because of write-offs, so the file uses 24 months of bank statements. After the screening and the expense factor, qualifying income clears the 50% debt-to-income ceiling with room to spare, even when the line is tested on the interest-only payment at the maximum draw.
On a primary residence, a 690 score falls in the 680+ tier, which reaches 85% CLTV on lines up to $500,000. Because the line stays below that size, an automated valuation ordinarily applies. The borrower draws at least 75% of the line at closing and uses the funds for the rental’s down payment.
The rental itself is financed with a DSCR purchase loan at 75% LTV. Its rent clears roughly 1.2x against the full housing payment, so the property carries its own file. The line’s payment is a personal obligation backed by the primary residence, and the rental loan does not depend on it. Whether the purchase lender accepts the borrowed funds is confirmed before the offer goes in. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Each side stays in its lane. The line tests the borrower, and the rental loan tests the property.
What should you prepare before applying?
A short checklist keeps the file from stalling on preventable gaps:
- 12 or 24 months of personal or business statements, with large deposits explained.
- Proof of the business and, where relevant, a CPA or tax-preparer letter supporting the expense factor.
- Title evidence showing the property is held by you or a revocable living trust.
- The current mortgage statement and homeowner’s insurance on the collateral.
- A clear list of financed properties, since exposure and property-count limits apply.
- A decision on whether you want a full appraisal rather than an automated valuation.
- A plan for the payoff if the collateral home will be sold.
Frequently Asked Questions
Can the draw be used as a down payment on a new home?
Usually yes, because the line is drawn against a property you already own and the funds are yours to spend. The open question is the purchase lender, which may ask where the down payment came from and may have its own rules on borrowed funds. Confirm that before you commit to a contract.
Can I borrow against an investment property?
Yes, but the terms are the tightest in the network. The ceiling is 70% CLTV, the minimum credit score is 700, the maximum line is $500,000, and only the 5-year draw and 25-year repayment structure is offered. Title must also sit with you or a revocable living trust, not an LLC.
What credit score do I need?
It depends on the collateral. A primary residence has a 600 program floor, a second home 640, and an investment property 700. The top ceiling of 90% CLTV requires 720 or better on a primary residence or second home. Lines above $500,000 require 700 or better (720 on the longer-runway program).
Is a bank statement HELOC the same as a DSCR loan?
No. A bank statement line is reviewed on documented income under the applicable program and tests your deposits and debt-to-income. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Many investors use a line on one property and a DSCR loan on the next.
Where is this available?
Lendmire’s equity-line programs are limited to its 16 full-service states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Some states add their own rules on line minimums, repayment structure or listing status.
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.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and real estate investors in its 16 full-service states open home equity lines of credit arranged through wholesale lenders. Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its 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. CFPB’s explanation of a HELOC
2. CFPB – What You Should Know About Home Equity Lines of Credit
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement HELOC Requirements on a Home Your Parents Live In · How to Get a Bank Statement HELOC for a Down Payment on a Bigger Home
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.