The Quick Read: The right equity line for your next primary home depends on three things: your credit profile, how much equity sits in the current house, and what you plan to do with that house after you buy, since the line and the purchase lender each set their own tests. The line does not buy anything. It supplies cash for the down payment, and a separate purchase mortgage pays for the new home.
- On a primary residence, lines across our wholesale network reach 90% combined loan-to-value (CLTV) only at a 720 credit profile or better, up to $500,000.
- A larger line, up to $750,000, is primary-residence only and caps at 75% CLTV with a full appraisal.
- The purchase lender decides whether borrowed money counts as your down payment. An open, undrawn line does not count as reserves.
- The real hurdle is usually your debt-to-income ratio once the old mortgage, the line, and the new mortgage all count.
Key Terms Defined
HELOC: A home equity line of credit, a revolving loan secured by a home you already own.
Equity: What the home is worth minus what you owe on it.
CLTV: Combined loan-to-value, meaning all loans on the home added together and divided by its value. The full line commitment counts, not just the drawn balance.
Lien position: Where a loan stands in line to be repaid. A first-lien line sits first. A second-lien line sits behind your existing mortgage.
Draw period: The stretch when you can borrow from the line, usually interest-only. Repayment follows.
DTI: Debt-to-income ratio, your monthly debts divided by your monthly income.
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.
What a HELOC Actually Does in This Move
A HELOC converts equity in the home you own into cash. You use that cash for the down payment and closing costs on the next home. A purchase mortgage covers the rest. Two loans, two lenders, two sets of rules.
The sequence runs like this:
1. Work out how much equity you have and how much of it a line can reach.
2. Qualify for the line on your credit, equity, and DTI.
3. Close the line and take the draw.
4. Apply for the purchase mortgage and show where the down payment came from.
5. Buy the new home.
6. Decide the old home’s fate: sell it and pay off the line, or keep it.
Many homeowners also use the line to make an offer without a sale contingency. NerdWallet’s guide to buying a home while selling describes this use and warns that you may carry costs on two properties at once.
How Big a Line Can Your Equity Support?
Take the maximum CLTV for your credit tier, multiply by the home’s value, and subtract your first mortgage balance. What remains is the most the line can be, before the dollar caps below.
Here is the percentage version. Say your first mortgage equals 50% of the home’s value and you hold a 720 credit profile. A 90% CLTV ceiling leaves room for a line worth up to 40% of value, subject to the $500,000 cap. At 700 with an 85% ceiling, the room is 35% of value. At 640 with an 80% ceiling, it is 30%.
Here are the primary-residence tiers across our network’s two wholesale programs. They are guidance, not promises, and every file gets a full review.
| Credit profile | Max CLTV (primary residence) | Line cap |
|---|---|---|
| 720+ | 90% | $500,000 |
| 700+ (720 on the longer-runway program) | 75% | $750,000 |
| 700+ | 85% | $500,000 |
| 660+ | 85% | $500,000 |
| 640+ | 80% | $500,000 |
| 620+ | 70% | $400,000 |
| 600+ | 60% | $400,000 |
At 720 you face a tradeoff. You can take 90% CLTV up to $500,000, or a bigger line up to $750,000 at a reduced 75%. A line above $500,000 needs a credit profile of 700 or better (720 on the longer-runway program, covered below) and a full appraisal. Lines run from $25,000 up. These ceilings apply to primary residences. Investment-property lines top out at 70% CLTV and $500,000, and second-home lines carry their own credit floor.
Thin equity ends the conversation early. If other liens already use up the CLTV ceiling, there is no room for a line. Run this math before you do anything else, because it tells you whether the strategy exists at all for your house.
What Line Lenders Look For
Line lenders review you, not the property’s rent. Here is what they check:
- Credit: The program floor is 600. The score model is single-bureau and keyed to the primary wage earner. The report can be no more than 90 days old at closing, and rescores are not allowed.
- DTI: The maximum is 50%. For credit profiles from 600 to 679 it is 45%. A ratio above 45% needs a 680 minimum. The line is qualified on the interest-only payment calculated on the maximum draw.
- Valuation: Lines at or below $500,000 ordinarily use an automated valuation with no traditional appraisal. A higher CLTV may call for a secondary valuation. Anything above $500,000 gets a full appraisal, and you may request one in any case.
- Title: The home must be held by you personally or in a revocable living trust. LLCs, corporations, partnerships, and irrevocable or land trusts cannot hold title.
- Property: Single-family, 2-4 units, PUD, townhome, and condo (including non-warrantable) are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural zoning are not.
- Derogatory history: A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure-family history splits by program. One program seasons a foreclosure at 7 years and a short sale or deed-in-lieu at 4. The other declines that history regardless of age.
- Exposure: A borrower is limited to three lines, and owning more than 15 financed properties makes you ineligible.
Availability is narrower than our DSCR footprint. HELOC files run only in 16 full-service states, and a few of those states add their own homestead-style limits.
The Catch: You Must Draw Most of the Line
These lines are standalone products in first or second lien position, so a paid-off home qualifies the same way as one with a mortgage. Two draw structures exist on primary residences. One is a 3-year interest-only draw with a 17-year fully amortizing repayment. The other is a 5-year interest-only draw with a 25-year repayment.
At least 75% of the line is drawn at closing on both. Pricing floats through the draw and repayment periods and never converts to fixed.
That shapes your sizing. If you need a down payment of a certain size, sizing the line far above it means paying interest on cash you do not need. It also means qualifying on the interest-only payment at the maximum draw. Ask for a line that fits the need, not the biggest line you can get. The minimum subsequent draw after closing is $1,000 on the longer-runway program in most states.
How the Purchase Lender Treats That Money
The purchase lender makes its own calls. It decides whether borrowed funds can serve as your down payment and what source-of-funds paper it wants. It also sets its own debt-ratio rules. Expect to document the line, the draw, and the deposit trail.
An open line balance is not reserves. If your purchase lender wants cash in the bank after closing, do not plan on counting undrawn capacity as liquidity.
DTI is where these files fail. Buying before you sell means three obligations count: the old mortgage, the new payment on the line, and the new mortgage. A HELOC adds a payment, so it cannot fix a DTI problem. It can create one. Run the combined ratio before you open the line, not after.
Some purchase programs treat the departing home’s payment differently once a sale contract is in place. That is not automatic and depends entirely on the purchase lender.
What Makes a Program Fit Your Situation
Lendmire is a mortgage broker, not a lender. It works with a network of wholesale HELOC lenders and matches the scenario to the program. The best program for your situation depends on your credit, the leverage you need, and how you document income. The lenders that write your file depend on the same factors.
Two wholesale programs sit behind the numbers above. The higher-leverage program is the one that reaches 90% CLTV at 720. The longer-runway program uses the 5-year draw and 25-year repayment structure. It also carries tighter credit-history standards, including two tradelines seasoned 12 months or one seasoned 24 months, and it allows modular homes. Where they differ, each figure applies only within its own program’s terms.
Fit comes down to a few questions:
- Do you need the highest leverage? Only a 720 profile on a primary residence gets 90% CLTV, and only up to $500,000.
- Do you need a line above $500,000? That is primary-residence only, at 75% CLTV, with an appraisal.
- Is your income self-employed? Bank-statement documentation can work, but business bank accounts need a 680 minimum for the deposit analysis. A 640 borrower qualifies for the line yet cannot use business accounts.
- Is your score under 640? Sub-640 profiles are limited to single-family homes with a clean 12-month housing history under the longer-runway program.
The Sequence That Keeps You Out of Trouble
- Before you list the old home: Open the line first. In six of our 16 states, a property listed for sale, or listed within the past 60 days, is ineligible. Listing first can close the door.
- Before you write offers: Know your combined DTI and confirm with the purchase lender that borrowed down-payment funds are acceptable.
- At closing on the line: Remember the 75% draw requirement. Move the funds into your own account and keep the paper trail.
- At closing on the new home: Present the line, the draw, and the deposit trail.
- When the old home sells: The line is paid from the sale proceeds. Ask about closing the account so it cannot be reopened by mistake.
How a HELOC Compares With the Other Ways to Fund This
| Option | How it works | Main tradeoff |
|---|---|---|
| HELOC | Revolving line on current home | Third payment until sale |
| Home equity loan | One lump sum, fixed schedule | Less flexible draws |
| Cash-out refinance | Replaces your first mortgage | Gives up your existing first mortgage |
| Bridge loan | Short-term loan against the old home | Priced for short use |
| Sell first | Proceeds fund the purchase | Timing and housing gap |
A HELOC lets you keep your existing first mortgage untouched. That matters when your current first mortgage is one you would not want to replace. The cost is a floating-price second payment. If you can sell first without hardship, selling first avoids the double-payment problem entirely.
Where the General Rule Breaks
Your old home is titled in an LLC. The line cannot hold title in an LLC. The property needs a vesting change first, or a different route such as a DSCR cash-out if it is a rental.
The equity is in a rental, not your primary. Investment-property lines cap at 70% CLTV and $500,000 with a 700 minimum credit score. Anything above $500,000 is not offered on an investment property. A 720 score does not buy more leverage there.
The old home’s CLTV leaves no room. A second lien already in place can leave nothing for a line.
You plan to keep the old house. Check the line’s occupancy and rental terms first. A federal HELOC brochure from the CFPB says renting out the home may be prohibited under a line’s terms. The same brochure says a HELOC generally must be paid off in full if you sell. Tell the lender your plan up front.
You assume a DSCR loan buys the new primary. It does not. DSCR loans are for non-owner-occupied investment property. They underwrite rent, not your owner-occupied purchase.
Risks and Stress Tests
The home securing the line is the collateral for everything. The CFPB’s explanation of a HELOC describes an open-end line you can borrow against repeatedly. It notes that repayment often runs ten or 20 years and warns that falling behind could cost you the home.
Test three scenarios before you commit:
- Slow sale: Can you carry the old mortgage, the line, and the new mortgage if the old house sits on the market?
- Floating payment: The line’s pricing floats and never converts to fixed. Can your budget absorb a higher payment?
- Failed purchase: If the new purchase falls through, you still hold a line, most of it drawn at closing, with no home to show for it.
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.
If the Old Home Becomes a Rental, Here Is Where DSCR Comes In
Plenty of investors keep the old home and rent it. If it is eligible and the line’s terms allow it, financing the next rental purchase is a separate question. Our complete DSCR loans guide walks through that side. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
DSCR compares rent to PITIA, which is principal, interest, taxes, insurance, and any association dues. It does not measure cash flow. Repairs, vacancy, management, utilities, and capex sit outside the calculation, so clearing 1.00 is not the same as profit.
Typical ranges across our network, subject to lender guidelines:
- Purchase: Most files land at 75%-80% LTV. Select high-leverage programs reach 85% with roughly a 700+ score.
- Cash-out refinance: Tops out around 75% LTV, with about 6 months of seasoning common.
- Coverage: 1.00 is where many select programs start. A separate select-lender path goes 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 leverage.
- Loan size: up to $3,000,000 on standard programs (smaller balances available through select lenders).
- Reserves: Commonly around 6 months of PITIA, varying by lender, leverage, and loan size.
Sequence matters. The line hits your personal DTI, while the DSCR loan looks at rent against payment. Do the owner-occupied purchase first, then the rental financing. For a new primary home, the order above is the one that holds up.
Who Should Skip This
- Anyone whose combined DTI fails with three obligations counted.
- Anyone who cannot carry both mortgages through a slow sale.
- Borrowers whose home is LLC-titled or an ineligible property type.
- Anyone for whom selling first is simply workable.
Frequently Asked Questions
Can a HELOC pay for the whole new home?
Rarely. Lines are capped by CLTV and dollar limits, and the purchase lender expects a mortgage on the new home. The line normally funds the down payment and closing costs.
Will the purchase lender accept HELOC money as my down payment?
That is the purchase lender’s call, not the line lender’s. Many accept documented borrowed funds, but each sets its own source-of-funds and debt-ratio rules. Confirm before you draw.
Should I open the line before listing my old home?
Yes. In six of our 16 states, a property listed for sale, or listed within the past 60 days, is ineligible for these lines. Opening first avoids that.
What happens to the line when the old home sells?
It is generally paid in full from the sale proceeds. Close the account at payoff so it does not stay open.
Can I use a bank statement HELOC if I am self-employed?
Sometimes. Documented income can qualify under the applicable program, subject to lender guidelines. Business bank accounts need a 680 minimum for the deposit analysis.
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 arranges DSCR investor loans across 41 markets, including Washington, D.C., and brokers HELOC files in 16 full-service states. Every figure here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
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.
Investors who want the broader program framework can review how DSCR loans work.
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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. NerdWallet – How to buy a home while selling your current one
2. CFPB – What You Should Know About Home Equity Lines of Credit
3. CFPB’s explanation of a HELOC
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: Best DSCR HELOC Program While the Home Is Still in Probate · Best DSCR HELOC Program on a Triplex · Best DSCR HELOC Program to Buy More Rental Properties
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.