The Quick Read: It depends on two limits, and the lower one sets your line: the equity room under the program’s combined leverage cap, and the rent coverage test on the full line. On a second lien, the cap is typically 70% combined loan-to-value at a 720 score or better, with lines from $50,000 to $500,000, subject to underwriting.
- Equity limit: property value times the allowed combined leverage, minus every lien already recorded.
- Rent limit: the rent must cover a stress payment on the whole line at a 1.10x minimum.
- A first lien on a paid-off rental reaches 75% LTV at 740 or better, with lines to $1,000,000.
- At least 80% of the line is drawn at closing, so size the line to the money you need now.
- This lane is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee. Missouri is not on the list. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
This article explains how the sizing works, so a Lincoln County owner can see how the math runs and what to expect from the line if the property sits in a state where the program is offered. A county does not change how the line is sized. Value, liens, credit and rent do.
What Is a DSCR HELOC?
A DSCR HELOC is a revolving line of credit on a rental you keep, qualified on the property’s rent instead of your personal income. It is written as a standalone second lien behind your existing first mortgage, or as a standalone first lien on a rental with no mortgage. It is never closed with a purchase, never a third lien, and never placed on your own home.
The federal consumer-finance regulator describes a HELOC as an open-end line that lets you borrow against equity repeatedly, and defines equity as value minus the mortgage balance. A DSCR version adds a rent test. The line qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. No traditional personal-income documentation, W-2s or pay stubs go in the file, and no personal income calculation runs. Vesting in your LLC is allowed on investment property, subject to program terms, and the members sign as guarantors.
For the full product picture, see Lendmire’s complete DSCR loans guide.
How Is the Maximum Line Calculated?
The maximum line equals property value times the allowed combined leverage, minus all existing liens. That is the equity limit. The same logic shows up in the federal consumer-finance regulator’s HELOC booklet, which says lenders usually take a percentage of appraised value and subtract what you owe.
On a second lien, combined loan-to-value means the first mortgage balance plus the new line, divided by value. Through select programs in the wholesale network, the ceiling is 70% at a 720 score or better, on lines up to $500,000. Below 720 there is no second-lien option.
On a first lien, the figures are loan-to-value, not combined:
| Credit score | Line size | Max LTV (first lien) |
|---|---|---|
| 740 or better | Up to $500,000 | 75% |
| 700 to 739 | Up to $500,000 | 70% |
| 720 or better | $500,000 to $1,000,000 | 65% |
A first lien exists only on a rental with no mortgage. A borrower who keeps a first mortgage can only take a second lien, which carries the 720 floor. A declining-market flag on the property lowers the ceiling by 5 points. All figures are ceilings, not offers, and every file is underwritten individually.
Which Limit Wins, Equity or Rent?
Whichever number is smaller sets your line. The rent test runs on the entire credit limit, not on the amount you plan to draw. That surprises owners who want a big line and a small draw.
The program requires a minimum 1.10x coverage. Coverage is gross monthly rent divided by a qualifying payment. That payment is a fully amortizing principal-and-interest payment on the whole line at a stress rate, which is the start rate plus 2 percentage points. 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. A lease in place is required, and a two-to-four-unit property may have at most one vacant unit.
How the first-mortgage payment enters the coverage calculation on a second lien should be confirmed on the file, because the lender’s own calculation governs.
Consider a scenario. A rental is owned free and clear, with strong equity, and the owner wants the largest line the equity allows. The equity limit looks generous, but the rent only covers a stress payment on a smaller line. The rent limit binds. Now flip it: a rental with a large first mortgage and strong rent. The rent clears easily, but the combined leverage cap leaves little room. The equity limit binds. Check both before you plan around a number.
Scenarios on a Lincoln County-Style Rental
Lincoln County, MO, serves here as a reference point only, since a county does not change line sizing. The scenarios below use percentages of value rather than county figures, because the leverage caps work the same way on any rental:
- Free and clear, first lien. At a 740 score, the equity limit is 75% LTV on a first lien for lines up to $500,000. Lines start at $50,000, so a rental with modest value may have its line shaped by the minimum line size as much as by the cap.
- Low first mortgage, second lien. At a 720 score or better, the cap is 70% CLTV. Subtract the first mortgage balance from that combined figure and what remains is the room. The rent test then checks the full line.
- High first mortgage, second lien. Combined leverage may leave no room at all.
These are illustrations, not quotes. The lender’s calculation governs.
What Changes Your Number
Several file facts move the figure up or down.
Credit tier. The tier is the lender’s own credit report. A second lien needs a 720 score. A first lien, which exists only on a rental with no mortgage, needs 700, and the score then sets the LTV: 700 to 739 reaches 70%, while 740 or better reaches 75% on lines up to $500,000. Lines above $500,000 carry a 65% LTV ceiling at 720 or better. Mortgage history matters too: no 30-day late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale or deed-in-lieu.
Valuation. Lines up to $400,000 use an automated valuation with a property inspection report, or a full interior appraisal. Lines above $400,000 take a full interior appraisal. Appraisal waivers are not accepted. The value you start with drives the equity limit, so a light valuation cuts the line directly.
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). Many owners who just refinanced have no room anyway.
Draw rules. At least 80% of the line is drawn at closing, never less than $50,000, and later draws are at least $5,000 each. So the usable cash on day one is most of the line. The draw period is 5 years interest-only on the drawn balance, then a 25-year repayment period, with a 30-year maturity. The rate is variable, and the rate and pricing terms come with the lender’s disclosures.
Exposure. The program allows at most 5 loans or $2,500,000 per borrower. Investors with large portfolios should count what they already have with it.
Key Terms Defined
DSCR: the rent divided by the qualifying payment, with a 1.10x minimum on this line.
Combined loan-to-value (CLTV): the first mortgage plus the new line, divided by property value.
Draw period: the stretch when you can borrow from the line and pay interest only on what you drew.
Seasoning: the time since you bought, refinanced or took title.
Stress payment: the payment used for the coverage test, sized on the entire line at a higher start rate.
When Does a DSCR HELOC Not Fit?
Skip it in these cases. The property is rural-designated, a row home, a condotel, a leasehold, or inside an age-restricted community. It is commercial, agricultural, mixed-use, a hobby farm, a modular or log home, or under a land contract. It was listed for sale in the prior 2 months, or carries a solar lien. The owner is a foreign national or ITIN borrower. Or the rental has no lease in place.
Eligible types are single-family, PUD, townhome, two-to-four units, warrantable and non-warrantable condos, and lots to 10 acres. Rural-designated land is outside this lane, which matters in a county with exurban and acreage parcels. Confirm designation early, because it ends the file.
NerdWallet notes that investment-property HELOCs come from fewer lenders and usually allow less borrowing than lines on a primary home, so a lender that offers one is the exception, not the default.
How Does It Compare With Other Options?
| Factor | DSCR HELOC | DSCR cash-out refinance | Bank investment HELOC |
|---|---|---|---|
| Keeps first mortgage | Yes (second lien) | No, replaces it | Yes |
| Reviewed on | Rental income | Rental income | Personal income and DTI |
| Structure | Revolving line | Lump sum | Revolving line |
| LLC title | Allowed, per program | Per program terms | Often not allowed |
A cash-out refinance replaces the first mortgage, so it makes sense when you want to restructure the whole loan. A HELOC makes sense when you want to leave the first mortgage alone and draw in stages. Lendmire’s piece How to Qualify for an Investment Property HELOC for Lincoln County MO Investors covers the personal-income lane, which has different limits and eligibility. Do not mix the two sets of figures.
The CFPB also notes that a lender may bar further draws if the property’s value falls significantly.
Frequently Asked Questions
Can the line be larger than my equity?
No. Equity sets the first ceiling. On a second lien, the first mortgage plus the new line cannot pass 70% of value, and on a first lien the cap is 75% at the top tier. The rent test can lower the line further.
Does it matter that I only need part of the line?
Yes. At least 80% of the line is drawn at closing, and the closing draw is never under $50,000. Size the line to the cash you need now, because the rent test runs on the entire limit.
How long must I own the rental first?
Two six-month clocks apply to the same file: 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).
Can my LLC hold title?
Yes, subject to program terms. The members sign as guarantors, and a title holder who is not a borrower signs a non-borrowing owner acknowledgment and the security instrument. Investment property only.
Is this available in Missouri?
No. The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee, and Missouri is not among them. The sizing logic above still shows how these lines work.
Next Step
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. Qualification is subject to lender guidelines and underwriting. This is not a commitment to lend. Tax treatment varies; consult a qualified professional.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges DSCR home equity lines of credit on rental property in 15 of its 16 licensed states (every licensed state except Tennessee) through wholesale lenders. The line is qualified on the rental’s rent rather than the owner’s personal income, and every line is subject to the lender’s guidelines and full underwriting. 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
3. NerdWallet – HELOC on an 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 for Lincoln County MO Investors · How to Qualify for a DSCR HELOC for Investors Learning How the Line Works · DSCR HELOC Requirements and Timeline for Landlords
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.