The Quick Read: Nothing new. Once the 5-year interest-only draw period ends, the line stops advancing, so new borrowing on that line is $0 and you owe whatever balance is outstanding over the 25-year repayment period. More capital means a new transaction, with a fresh valuation and a fresh leverage test, subject to underwriting.
- Payments change from interest-only on the drawn balance to fully amortizing principal and interest.
- The rate is variable, so the repayment payment can differ from what was planned at closing.
- A new line or a first-lien cash-out refinance is a new application, not an extension.
- The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee, through select programs.
What “How Much Can I Borrow” Means After the Draw Ends
Three different numbers hide inside that question.
1. New draws on the existing line: zero. The CFPB explains that borrowing from a HELOC stops after the draw period and the repayment period begins.
2. What you owe: the principal outstanding on the last day of the draw. That balance is fixed. It amortizes over the repayment period.
3. New borrowing: a separate loan. It gets its own valuation, its own combined-leverage test, and its own review of rent and credit.
On a DSCR line, the draw period is 5 years of interest-only payments on the drawn balance. Then comes a 25-year fully amortizing repayment period, with a 30-year maturity. At least 80% of the line is drawn at closing, so the undrawn limit at risk is small. Later draws, while the window is open, are at least $5,000 each. After the window closes, any limit you did not draw is gone.
How the Draw-to-Repayment Switch Works
The switch is a payment recast, not a new underwriting. During the draw, the payment covers interest on what you drew. As BiggerPockets’ glossary puts it, you pay interest during the draw and principal plus interest once it ends. On this program, the balance you carry into year six is the balance you pay down over the next 25 years.
Two things move the new payment. One is the size of the balance. The other is the variable rate in effect at that point. The rate and the pricing terms come with the lender’s disclosures. No payment figure belongs in a planning memo built today, because nobody can know it today.
The file does not re-run the rent test at the switch. The 1.10x coverage test happens at origination. But rent that carried the interest-only payment may carry the amortizing payment with less room, and that is the real stress point for a landlord.
| Phase | New draws | Payment type | Rate behavior |
|---|---|---|---|
| Draw period (5 years) | Yes, at least $5,000 each | Interest-only on drawn balance | Variable |
| Repayment period (25 years) | None | Fully amortizing | Variable |
How the Line Was Sized in the First Place
The post-draw balance traces back to the leverage and the qualifying test at closing. The line is reviewed on the rental’s income: no traditional personal-income documentation, W-2s or personal income calculation, subject to lender guidelines. Minimum DSCR is 1.10x, measured as gross monthly rent divided by a stress payment. That payment is fully amortizing on the entire credit limit at the start rate plus 2 percentage points. Rent is the lesser of the appraisal’s market rent and the lease, unless three months of receipts support a lease above market.
Leverage depends on lien position:
- Standalone second lien, behind the first mortgage you keep: up to 70% CLTV at a 720 credit score or better, on lines from $50,000 to $500,000.
- Standalone first lien on a rental with no mortgage: up to 75% LTV at 740 or better, and 70% LTV from 700 to 739, on lines to $500,000. Lines above $500,000, up to $1,000,000, carry a 65% LTV ceiling at 720 or better. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
A second lien counts the first mortgage balance plus the new line, divided by value. That is why a large first mortgage leaves little room for a second lien. All of these are ceilings, subject to underwriting, not offers.
Where the Money Comes From After the Window Closes
If you need more capital after year five, you have four paths. None of them is an extension of the old line.
1. Pay down and live with it. Principal reduction during the draw, or early in repayment, shrinks the recast payment.
2. Open a new line. Renewal is the lender’s choice, not a right. Experian lists refinancing into another HELOC or a home equity loan among the options. A new line means a new valuation and a new leverage test.
3. Refinance the first lien with cash-out. This can retire the line and the first mortgage in one loan. Lendmire’s complete DSCR loans guide covers how that product is reviewed.
4. Sell. Equity is realized, the line is paid off, and the lien releases.
The valuation path matters: lines to $400,000 use an automated valuation with a property inspection report, or a full interior appraisal. Larger lines take a full interior appraisal. Appraisal waivers are not accepted. A value that has dropped since closing cuts the combined leverage you can reach, which Lendmire covers in its piece How Much a Value Drop Cuts a HELOC After the Draw Period Ends.
A declining-market flag lowers the ceiling by 5 points, so a soft submarket at refinance time costs leverage on top of any price decline.
What Can Go Wrong at the Takeout
Plan the exit on day one. The failures here are structural.
The new test is not the old test. Rent that cleared 1.10x years ago has to clear it again on a new line. If the lease is gone or the unit sits vacant, the file changes. A two-to-four-unit property may have at most 1 vacant unit.
Seasoning resets. A rental bought or refinanced inside the last 6 months is not eligible (that clock runs from the last note date to the new note date), and the owner must have held title for 6 months (settlement date to note date). If you refinance the first mortgage to make room for a new line, you start that clock over.
Credit has to hold. A second lien needs 720 or better, and there is no second-lien tier below that. A first lien floor is 700. There must be no 30-day mortgage late in the last 12 months.
The balance may be the whole line. Because the closing draw is large and later draws are possible, the balance entering repayment can approach the full limit. That makes the amortizing payment the number to model, not the interest-only one.
Property type can change. Rural-designated property, row homes, condotels, leaseholds and a property with a solar lien are outside the program, so a refinance plan built on a property that has since picked up a solar lien needs a different route.
Investors who use a line as bridge capital need a defined takeout. A BiggerPockets lender comment says a HELOC is fine for acquiring a property if you have a reliable way to repay within a year or two, and warns that counting on a quick cash-out refinance is unlikely to work unless you force significant equity into the property. Equity you create has to be real before a new lender will count it.
Is a DSCR HELOC Really a Different Product From a DSCR Cash-Out?
Yes, and the draw question only applies to one of them. A DSCR cash-out refinance is a closed-end first lien with no draw period. A DSCR HELOC is a revolving line, written as a standalone second lien or a standalone first lien, with a draw period and a repayment period. The line keeps your existing first mortgage in place. The cash-out replaces it.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage, as the eCFR text of 12 CFR § 1026.3 describes for business-purpose credit. The LLC can stay on title, with members signing as guarantors, subject to program terms.
Key Terms Defined
Draw period: the 5-year window when you can borrow from the line, with interest-only payments on the drawn balance.
Repayment period: the 25-year stretch after the draw when no new draws are allowed and the balance amortizes.
CLTV: combined loan-to-value, the first mortgage balance plus the new line, divided by property value.
Stress payment: the fully amortizing payment on the full credit limit at the start rate plus 2 percentage points, used only to test coverage.
Undrawn limit: the part of the line you never borrowed. It does not carry into repayment.
Frequently Asked Questions
Can I draw on my DSCR HELOC during the repayment period?
No. Draws end with the draw period, and the repayment period is for paying the balance down. Any unused limit is no longer available. Borrowing again means a new line or a new loan, reviewed under the program’s rules at that point.
Does the rent test run again when repayment starts?
The 1.10x test is an origination test, so the switch itself is a payment recast. The practical issue is that the amortizing payment is larger than the interest-only one, and the rate is variable. Model whether rent still carries the new payment with room to spare.
How soon after buying a rental can I open a DSCR HELOC?
Two six-month clocks apply: the line is not available on a rental bought or refinanced in the last 6 months (last note date to new note date), and title must have been held for 6 months (settlement date to note date). Both are subject to underwriting.
Can I get a new line when the old one runs out?
Possibly, but it is a new application, not a renewal you are owed. It needs a new valuation and a new leverage test: up to 70% CLTV on a second lien at 720 or better, or on a first lien up to 75% LTV at 740 or better and 70% LTV from 700 to 739. A declining-market flag lowers the ceiling by 5 points. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
What if I want a larger amount than my line allows?
Second-lien lines run to $500,000. A first lien on a rental with no mortgage can reach $1,000,000, but lines above $500,000 carry a 65% LTV ceiling at 720 or better. Exposure is capped at 5 loans or $2,500,000 per borrower with the program. Leverage and pricing vary by lender and program; the final terms follow the full file review.
If you are considering a home equity line on a rental property and want to see how the numbers work, Lendmire can help you compare DSCR HELOC options based on the property, the rent, the equity available, credit profile, combined leverage, and your goals. Reach the team at 828-256-2183 or request a quote. Lendmire is a broker arranging financing through select lenders in its wholesale network, and all program terms are subject to underwriting and are not a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. DSCR home equity lines of credit, which are revolving lines on non-owner-occupied one-to-four-unit rentals qualified on the property’s rent instead of the owner’s personal income, are arranged through wholesale lenders in 15 of those 16 states (every licensed state except Tennessee), 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. CFPB
2. BiggerPockets – HELOC glossary
3. Experian
4. BiggerPockets – Thoughts on using HELOC for first investment property
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: DSCR HELOC Requirements and Timeline for Landlords · Can You Get a DSCR HELOC While Your Credit Is Frozen? · DSCR HELOC Requirements for Landlords Planning a Rehab Draw
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.