The Quick Read: On a second lien, you can typically borrow up to 70% combined loan-to-value (CLTV) at a 720 credit score or better, on lines from $50,000 to $500,000, minus the mortgage you already owe. Equity, credit, lien position, and rent coverage set the limit, not reserves, subject to underwriting.
- Second lien: up to 70% CLTV at 720 or better, lines of $50,000 to $500,000.
- First lien (no mortgage): up to 75% LTV at 740 or better, 70% at 700 to 739, on lines to $500,000.
- Larger first-lien lines: 65% LTV at 720 or better, up to $1,000,000.
- Rent test: 1.10x coverage on a stress payment over the entire line.
- No reserves and no cash to close are required through select programs. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Programs change, and every file is underwritten individually. Nothing here is a commitment to lend.
What Does “No Reserves and No Cash to Close” Actually Mean?
It means the program has no requirement for savings left over after closing and no requirement that you bring money to the table. The line qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Those are two separate tests. Reserves are the cash you hold after closing. Cash to close is the money you must bring on closing day. This program waives both. Plenty of DSCR purchase and refinance programs across the market still ask for reserves, so this is a feature of the product, not of DSCR lending in general.
“No requirement” is not “no scrutiny.” The lender still pulls credit, reads the lease, and orders a valuation. You qualify on the rental’s income: no traditional personal-income documentation, W-2s, or personal income calculation.
How Is the Borrowing Limit Calculated?
The limit is the property’s value times the maximum leverage, minus what you owe on existing liens, capped at the program maximum. On a second lien, combined loan-to-value counts the first mortgage balance plus the full new line, divided by value.
That last part trips people up. The test counts the whole credit limit, not just the amount you draw. A line can’t be sized to “borrow a little now and keep room for later” beyond the ceiling.
Here is the sizing logic, step by step:
1. Take the property value from the valuation. 2. Multiply by the ceiling for your tier and lien position. 3. Subtract the first mortgage balance, if you keep one. 4. Compare what is left to the $50,000 minimum line and the program cap. 5. Then run the rent test on whatever line size survives.
The smallest answer wins.
Second Lien or First Lien: What Changes?
The lien position decides your leverage tier and credit floor. A second lien sits behind a first mortgage you keep. A first lien applies only to a rental with no mortgage.
| Position | Credit score | Maximum | Line size |
|---|---|---|---|
| Second lien | 720 or better | 70% CLTV | $50,000–$500,000 |
| First lien | 740 or better | 75% LTV | up to $500,000 |
| First lien | 700 to 739 | 70% LTV | up to $500,000 |
| First lien, large | 720 or better | 65% LTV | above $500,000, to $1,000,000 |
Below 720 there is no second-lien option. If you keep a first mortgage, a second lien is the only structure available, and 720 is the floor. A declining-market flag on the property can lower the ceiling by 5 points. Exposure is capped at 5 loans or $2,500,000 per borrower with the program.
Picture an owner with a rental worth a round number, a 720 score, and a first mortgage already near 60% of value. A 70% CLTV ceiling leaves about ten points of value as headroom. On a modest property, that sliver may fall under the $50,000 minimum line. Same owner, same credit, no line.
How Does Rent Coverage Cap the Line?
Rent must cover the qualifying payment at least 1.10 times. That payment is a fully amortizing payment on the entire credit limit at a stressed start rate (the start rate plus 2 percentage points).
Because the test runs on the full limit, a bigger line needs more rent. 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 must be in place, and a two-to-four-unit property may have at most 1 vacant unit.
Taxes and insurance are not part of the qualifying payment. On a second lien, confirm on the file how the lender treats the first-mortgage payment, because the lender’s own coverage calculation governs.
Run it as a ratio. Say a duplex’s rent covers the stressed payment on a $200,000 line at about 1.25x. That clears 1.10x. Push the line toward $400,000 and the same rent lands near 0.6x. The property didn’t change. The line did. When the number falls short, the practical fix is a smaller line, not a hunt for a looser lender. Lower ratios belong in other products, where reserves usually rise.
Worked Examples: Which Limit Wins?
Three modeled owners, each with a 720 score and a rental worth the same amount, show how different limits bind. These are illustrations, not offers.
Low existing balance. The first mortgage is small. Leverage leaves plenty of room, so the rent test becomes the cap. The owner sizes the line to the rent, not the equity.
Mid balance. Headroom is real and rent coverage is comfortable. The leverage ceiling sets the line, and the owner draws at least 80% at closing.
High balance, recent purchase. The first mortgage is already large, often because the owner bought at high leverage. The ceiling leaves no room until paydown or appreciation.
Asking “which of these three limits binds first?” saves wasted applications.
Where the No-Reserves Promise Breaks
The program asks for no reserves, but four things still shape the deal.
The draw rule. At least 80% of the line is drawn at closing, and the closing draw is never less than $50,000. On the smallest lines, the whole line is drawn at closing. Later draws are at least $5,000. This is not a standby reserve line, so you can’t open it and leave it sitting unused as a safety net.
The payment risk. The draw period is 5 years interest-only on the drawn balance. A 25-year fully amortizing repayment period follows, for a 30-year maturity, at a variable rate. Zero cash in means your equity funds everything, and you carry a payment sized to a mostly drawn line.
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).
The next lender. If you use the proceeds as a down payment, the lender on that purchase applies its own reserve and sourcing rules. Some DSCR programs accept borrowed funds toward the down payment but not toward reserves. Waived reserves on this line do not carry over.
Timing matters too. You can’t open a line against a property you haven’t bought. It has to exist before you go under contract on the next property.
Credit, Property, and Valuation Rules
Credit comes from the lender’s own report. Expect no 30-day mortgage late in the last 12 months, and 48 months since a bankruptcy, foreclosure, short sale, or deed-in-lieu. U.S. citizens, permanent residents, and non-permanent residents with a Social Security number are eligible. Foreign nationals and ITIN borrowers are not.
The property must be a non-owner-occupied one-to-four-unit rental. Single-family, PUD, townhome, and warrantable and non-warrantable condos are eligible. Rural-designated property, condotels, row homes, leaseholds, mixed-use, and anything listed for sale in the prior 2 months are out.
Lines up to $400,000 use an automated valuation (confidence score 85 or better) with a property inspection report, or a full interior appraisal. Larger lines need the full appraisal. Appraisal waivers are not accepted.
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.
How Does It Compare With a Bank HELOC?
A bank HELOC on a rental is underwritten on your personal income and debt-to-income ratio. NerdWallet notes that on an investment property you may have a smaller pool of lenders and won’t be able to borrow as much as against your primary home. It also says multiple appraisals may be required.
On the DSCR HELOC network program, reserves are not required, subject to underwriting.
A DSCR cash-out refinance replaces your first mortgage. The HELOC leaves it alone. If your existing first mortgage is one you’d rather keep, a line behind it reaches the equity without touching it. Lendmire’s piece How to Qualify for a DSCR HELOC With No Reserves and No Cash to Close walks through the qualification side. The complete DSCR loans guide covers how the broader product family fits together.
One warning on research: some lenders market a different product, a HELOC on a rental qualified on personal income. Its limits and reserves differ, so don’t mix the two sets of numbers.
When to Skip This Product
Skip it if your credit sits below 720 and you keep a first mortgage. Skip it if your headroom falls under $50,000. Skip it if you want a standby line you can leave undrawn, since 80% funds at closing. Skip it if your rent can’t clear 1.10x on the whole limit.
It also doesn’t fit a property listed for sale recently, a rural or condotel property, or a deal already under contract. This is a judgment call: the strongest case is an owner with a rental that has real equity, a first mortgage they like, and steady rent. The weakest is a fresh purchase at high leverage.
Lendmire is a broker that arranges the line through a wholesale lender, so availability and terms depend on the lender’s guidelines.
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. Call 828-256-2183.
Frequently Asked Questions
Can I borrow 100% of my equity?
No. Combined leverage is capped, and it counts your first mortgage plus the full line limit. On a second lien the ceiling is typically 70% CLTV at 720 or better. Equity above that ceiling stays untouched.
Does “no cash to close” mean the line costs nothing?
No. It means no requirement to bring funds to closing. The lender’s HELOC disclosures still show what you owe, and the line is a lien with a stress-tested payment, subject to underwriting.
How long do I have to own the rental first?
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).
Can I use the line as a down payment on my next rental?
Yes, if the line exists before you go under contract. The line is never closed together with a purchase. The next lender will apply its own reserve and sourcing rules to those funds.
Can my LLC hold title?
Often, yes, subject to program terms. Vesting in your LLC is allowed on investment property, and the members sign as guarantors.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. It arranges DSCR home equity lines of credit on rental property through wholesale lending partners in 15 of its 16 licensed states (every licensed state except Tennessee); each line is written on a non-owner-occupied one-to-four-unit rental and reviewed individually by the lender under the program’s credit and leverage 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. NerdWallet
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 for Refinancing a Balance Into a New HELOC? · How Much Can You Borrow on a DSCR HELOC Past Conventional Loan Limits? · How Much Can You Borrow on a DSCR HELOC on a Vacant Rental Without a Lease?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.