The Quick Read: No program across the wholesale network we place files with offers a true 20-year draw, and the best program for you depends on the property, your credit profile, and how long you need interest-only access. The “20 years” most people remember is usually the repayment phase, not the draw.
- The longest interest-only draw we place is 5 years, followed by a 25-year repayment, for a 30-year total life.
- Investment-property lines run only the 5-year draw and 25-year repayment structure.
- Income is read from deposits on your bank statements, and that is still full underwriting, not a shortcut.
- Investment lines top out at 70% CLTV and a $500,000 line, with a 700 minimum credit score.
- An LLC cannot hold title on these lines. A rental deeded to an LLC points toward a DSCR cash-out instead.
The Short Answer on “20 Years”
The phrase “20-year draw” mixes up three different numbers. A HELOC (home equity line of credit) has a draw period, a repayment period, and a total life. Those are not the same clock.
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 draw period is when you can borrow, repay, and borrow again. Payments are usually interest-only on what you owe. The repayment period is when borrowing stops and the balance amortizes, which means each payment includes principal. The total life is the two added together.
Experian describes the typical market pattern as a draw of five to 10 years, followed by a repayment period of about 20 years. Read quickly, that sounds like a 20-year line. It is really a 10-year draw plus a 20-year repayment, or about 30 years total.
On the network we work with, the structure runs the same total length, just cut differently. A 5-year draw plus a 25-year repayment is also 30 years. You do not get a 20-year interest-only runway. You get a long total life with a 5-year borrowing window.
Key Terms Defined
Draw period: The window when you can pull money from the line, usually paying interest only on the balance.
Repayment period: The phase after the draw ends, when you can no longer borrow and payments cover principal and interest.
CLTV (combined loan-to-value): All loans on the property added together, divided by the property’s value.
Expense factor: The percentage of business deposits removed to account for operating costs before the rest counts as income.
DTI (debt-to-income): Your monthly debt payments divided by your monthly qualifying income.
Interest-only: A payment that covers the interest charge but does not reduce the balance.
How a Bank Statement HELOC Works, Step by Step
A bank statement HELOC is a real home equity line. The only thing that changes is how your income gets documented. Here is the sequence.
1. Documentation. The lender totals qualified deposits from personal or business statements over a set window. Market programs commonly use 12 or 24 months, then divide by that number of months. HousingWire’s non-QM guide lists the bank statement HELOC as a revolving second lien for self-employed homeowners tapping equity.
2. Expense factor. Business statements usually take an expense factor off the top. Personal statements are often treated differently, because the deposits are already net of business costs.
3. Full file review. Credit, DTI, equity, property type, and title still get reviewed. This is alternative documentation, not no documentation.
4. Valuation. Lines at or below $500,000 ordinarily use an automated valuation instead of a traditional appraisal. You can request a full appraisal in any case.
5. Closing draw. At least 75% of the line is drawn at closing. Interest accrues on that portion from the start.
6. Draw phase. You make interest-only payments on the drawn balance. You can repay and borrow again within the limit. A later draw carries a $1,000 minimum, or $4,000 in Texas.
7. Repayment phase. Borrowing stops. Payments become fully amortizing.
8. Floating pricing. Pricing floats through both phases and never converts to fixed.
DTI is tested on the interest-only payment calculated on the maximum draw. The ceiling is 50%. It drops to 45% for credit profiles from 600 to 679, and a ratio above 45% needs at least a 680 score.
One more structural point. The line can sit in first or second lien position. A second lien lets you keep an existing first mortgage in place. That matters when your first mortgage is one you would not want to replace.
Why Draw Length Matters
A longer draw buys interest-only payments for longer. It does not buy cheaper money or guaranteed access. A long draw is a contract term. The lender can still freeze or reduce a line under the contract terms, and repayment ends all access.
Here is how the structures on our network compare.
| Occupancy | Draw | Repayment | Total life |
|---|---|---|---|
| Investment property | 5 years | 25 years | 30 years |
| Primary or second home | 3 years | 17 years | 20 years |
| Primary or second home | 5 years | 25 years | 30 years |
Tennessee shortens both structures: 3-year/12-year and 5-year/10-year.
Look at the 3/17 versus 5/25 choice for a primary residence. The 3/17 line gives you less time to borrow and then amortizes the balance over 17 years. The 5/25 line gives you two more years to borrow and spreads principal over 25 years. Same balance, more years to repay it, so each monthly principal slice is smaller. The step-up at the end of the draw is gentler.
On an investment property you do not get to choose. The 5/25 structure is the only one offered. That also happens to be the longest runway in the network.
The Repayment Cliff
Plan for the end of the draw on day one. During the draw you pay interest on the balance. When repayment starts, that same balance amortizes, so the payment steps up. The CFPB’s HELOC explainer notes that payments can rise once the repayment period begins. Because pricing floats, the draw-phase payment is not locked either.
Two habits soften the cliff:
- Draw only what the project needs. Since 75% is drawn at closing, size the line to the use of funds, not to the maximum.
- Stress the repayment payment before you sign. Ask what the fully amortizing payment looks like on your whole balance, not only the interest-only payment.
Some lenders outside this network require a balloon at the end of the draw instead of an amortizing repayment. Experian flags that variant. Read the term sheet for it. The programs we place use fully amortizing repayment.
What Do Lenders Look For?
The best program for your situation depends on five things: occupancy, credit, leverage, title, and documentation. Here are the ceilings by occupancy. Each figure applies only to its own occupancy and transaction type, and every figure is subject to lender guidelines and full file review.
| Occupancy | Max CLTV | Min credit | Max line |
|---|---|---|---|
| Investment property | 70% | 700 | $500,000 |
| Second home | 90% only at 720+ | 640 | $500,000 |
| Primary residence | 90% only at 720+ | 600 | $750,000 |
The lower credit tiers step the ceiling down. A second home at 660 reaches 80% CLTV, for example. A primary residence at 640 reaches 80% CLTV. A Texas primary residence is a homestead and caps at 80% combined. If your property is a rental, ignore the 90% figure completely. The investment ceiling is 70%.
Beyond leverage, the file review covers:
- Credit. The score comes from a single bureau, keyed to the primary wage earner. The report can be no more than 90 days old at closing. Tradeline and housing-history standards vary by lender.
- Derogatory history. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Investment files follow a 7-year path for foreclosure and 4 years for a deed-in-lieu, pre-foreclosure, or short sale.
- Property type. Single-family, 2-4 units, PUD, townhome, and condominium are eligible, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not offered.
- Exposure. A borrower can hold up to three of these lines. A borrower with more than 15 financed properties is not eligible.
- Availability. These lines are brokered in Lendmire’s 16 full-service states only. That is narrower than the 41-market DSCR footprint.
Qualifying With Bank Statements
The mechanics are simple. The lender takes the qualified deposits over your chosen window and removes any expense factor on business accounts. It divides the remainder by the number of months. That is your qualifying income. Then your DTI is tested against it.
Two examples of how this plays out, without dollar figures:
- A contractor with business statements. Total deposits are high, but the expense factor removes a share before income is counted. The coverage figure is lower than the gross deposits suggest.
- A consultant using personal statements. Deposits land in a personal account and are often counted more directly, but the lender will look for transfers that are not real income.
Lumpy deposits, one-time transfers, and commingled accounts all get questioned. Large one-time deposits that are not income get excluded. Clean, consistent statements make the file easier to read. If your tax return shows a loss from depreciation or timing, a short written explanation helps.
Self-employed investors often show low taxable income because of deductions. Bank statements capture the cash that actually arrives, which can give a fuller picture of income than a tax return alone.
When the Property Is in an LLC
Title decides the product. These lines can be drawn only against a property titled in your own name or in an inter vivos revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title.
That is the sharpest difference from a DSCR loan. A DSCR cash-out qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so it works for LLC-held rentals. A bank statement HELOC is reviewed on your personal deposits and DTI. If your rental is already deeded to an LLC, you either change the vesting or use a DSCR cash-out. Our complete DSCR loans guide walks through the second path.
How This Compares With Other Routes
| Factor | Bank statement HELOC | DSCR cash-out | Traditional bank HELOC |
|---|---|---|---|
| Reviewed on | Deposits and DTI | Rent vs. payment | Tax returns, W-2s |
| LLC title | Not allowed | Often allowed | Rarely |
| Structure | Revolving line | Closed-end loan | Revolving line |
| Draw access | Yes | No | Yes |
Traditional bank HELOCs are full documentation. A self-employed investor with low taxable income often gets shut out. Those lenders may also decline investment-property lines altogether.
For a one-time lump sum, a closed-end loan can fit better than a revolving line. If you want to keep drawing and repaying, the line wins. If you want one payout and a fixed schedule, it does not.
Risks and Trade-Offs
- Floating pricing. The draw payment is not locked and the line never converts to fixed. Your cost can move in either direction.
- Interest-only is not cheap. The balance is still owed in full.
- Second-lien position. If the line sits behind your first mortgage, you now carry two obligations against the property.
- Equity can fall. A line sized to today’s value can look heavy if the property loses value.
- Access can be frozen. The FTC notes that lenders can stop advances under the contract terms.
- Listing restrictions. A property listed for sale, or listed within the past 60 days, is ineligible in NC, PA, TN, TX, and WA.
Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
One market-context point. HousingWire reports that bank statement loans made up about 34% of non-QM volume, with DSCR loans near 29%. These are the two main alternative-income channels for investors.
Questions to Ask Before You Apply
Because the best program depends on your situation, a broker’s job is to match the file to the lender. Ask these:
- Which structure applies to my occupancy, and is it 3/17 or 5/25?
- What is the maximum CLTV at my credit score, for my occupancy?
- How are deposits counted, and is there an expense factor on my account type?
- Does my title qualify, or does it need a vesting change?
- What is the fully amortizing payment on my whole balance?
- Can the line be frozen or reduced, and under what terms?
Prepare 12 to 24 months of statements, a short note explaining unusual deposits, and your title documents.
Frequently Asked Questions
Is there any bank statement HELOC with a 20-year draw?
Not through the wholesale network we place files with. The longest draw is 5 years, with a 25-year repayment. A few lenders in the broader market advertise 15- or 20-year draws, but those typically require full documentation, which defeats the purpose for a self-employed borrower.
Can I get a HELOC without traditional personal-income documentation?
Yes, under a bank statement program. It is reviewed on documented income under the applicable program, subject to lender guidelines. You still provide statements, and the lender reviews credit, DTI, equity, property, and title.
Is the draw period interest-only?
Yes. Payments during the draw are interest-only on the drawn balance. Because at least 75% of the line is drawn at closing, interest begins on that portion immediately. Pricing floats and never converts to fixed.
What credit score do I need on a rental property?
A 700 minimum applies on investment-property lines, with a 70% CLTV ceiling and a $500,000 maximum line. Each file is reviewed individually.
Can I use a bank statement HELOC if my rental is in an LLC?
Not as titled. The line needs title in your own name or in a revocable living trust. An LLC-held rental points toward a DSCR cash-out, or toward a vesting change before applying.
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. Lendmire is a mortgage broker, not a lender, and every figure here is subject to lender guidelines and full file review. A long total life is real. A long draw is the part you will not find, so choose the structure around when you will need the money and when you will be ready to repay it.
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.
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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: What Is a Draw Period on a HELOC
2. HousingWire: Non-QM Loans Guide
3. CFPB: What Is a Home Equity Line of Credit (HELOC)
4. FTC: Home Equity Loans and 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: Best Bank Statement HELOC Program for 1099 Contractors · Best Bank Statement HELOC Program on an Inherited Rental · Best Bank Statement HELOC Program on a Condo With an HOA
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.