The Quick Read: Your ceiling is the combined loan-to-value cap times the rental’s value, minus every lien already on it, and then the dollar cap on the line applies. Through select programs in Lendmire’s wholesale network, that works out to lines of $50,000 to $500,000 at up to 70% CLTV on a second lien (720 credit score or better), and up to $1,000,000 on a first lien, subject to underwriting. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
- Second lien: up to 70% CLTV at 720 or better, lines up to $500,000.
- First lien on a rental with no mortgage: up to 75% LTV at 740 or better, 70% at 700 to 739, and 65% on lines above $500,000.
- The rent qualifies the line at a minimum 1.10x DSCR on a stress payment over the whole line.
- At least 80% of the line is drawn at closing, so this is not a standby account. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
A flip loan is sized differently. It is built on purchase cost, rehab budget and after-repair value, so the two products answer different questions.
What Is a DSCR HELOC, and How Is It Different From a Flip Loan?
A DSCR HELOC is a revolving line secured by a rental you already own. It is written as a standalone second lien behind the first mortgage you keep, or as a standalone first lien on a rental with no mortgage. The rent qualifies it, so no traditional personal-income documentation, W-2s or personal income calculation are involved, subject to lender guidelines. Your LLC can stay on title, subject to program terms.
A fix-and-flip loan is short-term financing for a different property. It funds a purchase and a staged rehab, and it is repaid by sale or by refinancing into a rental loan. One loan pulls equity from something you own. The other finances the project itself.
Key Terms Defined
- CLTV (combined loan-to-value): the first mortgage balance plus the new line, divided by the property’s value.
- LTV: the single loan balance divided by value, used when the line is the only lien.
- DSCR: gross monthly rent divided by the qualifying payment on the line.
- ARV (after-repair value): what a flip property is expected to be worth once the rehab is done.
- Draw period: the stretch when you can borrow against the line, interest-only on the drawn balance.
How Is the Maximum Line Calculated?
The formula is simple. Multiply the property value by the CLTV cap, then subtract what you owe. The CFPB’s HELOC booklet shows the same arithmetic with an illustrative cap: a $100,000 value at a 75% cap gives $75,000, and a $40,000 existing mortgage leaves a $35,000 potential line. The percentage in that example is not a rental rule. The rental figures below are.
On a second lien, the cap is 70% CLTV at a 720 score or better. Picture a rental worth $400,000 with a first mortgage at 50% of value. That leaves 20 points of value as the most the line can reach. Raise the first mortgage to 65% of value and only 5 points remain, which falls under the $50,000 minimum line. Thin equity ends the conversation before credit or rent ever matters.
On a rental with no mortgage, a first-lien line reaches 75% LTV at 740 or better and 70% from 700 to 739, on lines up to $500,000. Above $500,000, up to $1,000,000, the ceiling is 65% LTV at 720 or better. A declining-market flag can lower any ceiling by 5 points. Lenders test the full line against the cap, not only the amount you draw. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
A borrower who keeps a first mortgage can take only a second lien, and that needs a 720 score. A first lien exists only on a rental with no mortgage.
Which Cap Binds First?
| Situation | What usually binds first |
|---|---|
| Second lien, large first mortgage | The 70% CLTV cap |
| Second lien, strong equity | The $500,000 line cap |
| First lien, 700 to 739 score | The 70% LTV tier |
| First lien above $500,000 | The 65% LTV ceiling |
| Rent is modest against a large line | The 1.10x coverage test |
The coverage test deserves its own note. The qualifying payment is principal and interest on the entire credit limit, amortized fully at a stress level above the start rate. Taxes and insurance are not part of it. Rent is the lesser of the appraisal’s market rent and the lease, unless three months of receipts support a lease above market. Because the test runs on the whole line, a bigger line demands more rent. Sizing the line to the flip budget instead of the maximum can be the difference between clearing 1.10x and missing it.
How Does a Flip Loan Size Its Money Instead?
Flip lenders lend on the deal. The point is structural: the loan follows cost and ARV, and the rehab budget is held back and released in stages.
A flip loan can therefore reach far more than a HELOC when you have little equity elsewhere. A HELOC reaches only the equity left after existing liens, up to the cap.
The Same Flip, Funded Three Ways
| Funding path | What sizes it | Who it favors |
|---|---|---|
| Flip loan only | Cost and ARV of the flip | Low existing equity |
| DSCR HELOC only | Equity in a rental you own | Strong equity, rent that clears 1.10x |
| HELOC for the equity check, flip loan for the rest | Both | Owners who want less cash out of pocket |
Say an investor owns a paid-off rental and has a flip under contract. A first-lien line on that rental can cover the purchase and rehab if the line size fits, and the investor repays it after the sale and can draw again, subject to the program’s draw rules. That reusability is the HELOC’s real edge.
The catch is the draw rule. At least 80% of the line is drawn at closing, with no less than $50,000 drawn then, and later draws are at least $5,000. Interest runs on the drawn balance, so a line sized far above the flip’s real need is costly to carry. Plan the line to the project.
Where Does the Combination Break?
Stacking is where investors overreach. A line against a rental plus a flip loan against a second property means two sets of obligations on two assets. If the flip stalls, the line’s payments continue and the rental carries them. Run the combined position with your own rent coverage before you commit.
Other limits matter too:
- Draw period: 5 years interest-only, then a 25-year repayment period, on a 30-year maturity, with a variable rate.
- Exposure: at most 5 loans or $2,500,000 per borrower with the program.
- Seasoning: 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). A rental you just bought at high leverage will not work.
- Property: rural property, condotels, row homes and leaseholds are outside it. A property listed for sale in the prior 2 months is also out.
What Does the File Look Like?
Lines up to $400,000 use an automated valuation with a property inspection report, or a full interior appraisal. Larger lines require a full interior appraisal. Appraisal waivers are not accepted. No reserves or cash to close are required. Credit minimums are 720 on a second lien and 700 on a first lien, with no 30-day mortgage late in the last 12 months and 48 months since a bankruptcy or foreclosure. A lease must be in place, and a two-to-four-unit property can have at most one vacant unit.
Borrowers must be U.S. citizens, permanent residents, or non-permanent residents with a Social Security number. The line is a non-owner-occupied product, never a line on your own home. The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee.
For the broader picture, Lendmire’s complete DSCR loans guide covers how property-rent-based lender review works across products.
When Does a HELOC Beat a Flip Loan, and When Doesn’t It?
| Investor profile | Likely fit |
|---|---|
| Owns a free-and-clear rental, wants reusable capital | DSCR HELOC (first lien) |
| Owns a rental with a moderate mortgage and strong score | DSCR HELOC (second lien) |
| Little equity, first flip | Flip loan |
| Scaling many flips a year | Flip loan, possibly with a line for equity checks |
| Credit under 700 | Flip loan; the line has no tier for you |
The flip point is leverage on the project. If the deal needs more than your rental equity can release, a flip loan reaches further. If you have the equity and the rent coverage, a line can be the cheaper carry because interest accrues only on the drawn balance, though investors disagree on which costs less, so model both over your likely hold time.
Also consider the exit. A flip loan is repaid by sale or by refinancing into a rental loan. A line stays in place after the project ends, so repaying it at sale is a decision you make, and you should plan for the line’s payments if the property sits unsold. A line can also be frozen or reduced if values fall, per the CFPB’s HELOC explainer, which also covers how draw periods and minimum draws work on lines in general. A home equity line on your own residence is a different, owner-occupied product, and this program does not offer it.
Frequently Asked Questions
What is the most I can borrow on a rental with a mortgage?
Up to 70% CLTV on a second lien at a 720 score or better, on lines up to $500,000, subject to underwriting. Subtract your first mortgage balance from 70% of value, and the remainder is the ceiling before the dollar cap and the coverage test apply. Below 720 there is no second-lien tier.
Can a first-lien line go above $500,000?
Yes, on a rental with no mortgage, lines run to $1,000,000. Above $500,000 the ceiling is 65% LTV at a 720 score or better. That is lower than the 75% available on smaller first-lien lines at 740 or better. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
How long must I own the rental before applying?
A rental bought or refinanced inside the last 6 months is not eligible (last note date to new note date), and you must have held title for 6 months (settlement date to note date). A fresh purchase or recent cash-out refinance has to wait.
Can my LLC hold the property?
Yes. Vesting in your LLC is allowed on this investment-property product, subject to program terms. The members sign as guarantors, and a title holder who is not a borrower signs an acknowledgment.
Can I draw only what the flip needs?
Not entirely. At least 80% of the line is drawn at closing, and later draws are at least $5,000 each. Size the line to the project so you are not paying interest on idle money.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges DSCR financing through select lenders in its wholesale network. It does not lend directly. DSCR HELOC options are available through select programs, subject to underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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.
A flip that depends on one rental’s equity is only as sound as that rental’s coverage, so test the line against the rent before you test it against the project.
For more on how short-term financing works, see the hard money loan overview.
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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 – What You Should Know About HELOCs (booklet)
This article is part of Lendmire’s DSCR HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can You Borrow on a DSCR HELOC on a Vacant Rental Without a Lease? · How Much Can You Borrow on a DSCR HELOC for Refinancing a Balance Into a New HELOC? · How Much Can You Borrow on a DSCR HELOC on That Property?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.