How Much Can You Borrow on an Investment Property HELOC on a Severance Package?

The Quick Read: Usually the answer is set by equity, not by the severance check: on an investment property, the network ceiling is 70% combined loan-to-value, with lines from $25,000 to $500,000, and severance adds little or nothing to the income a personal-income lender will count. Across Lendmire’s wholesale network of select lenders, the same few rules apply to nearly every file.

• The formula: maximum line equals 70% of the property’s value, minus every lien already on it.
• Credit: 700 is the minimum for an investment line. A 720 score reaches the same 70% ceiling as a 700 score.
• Debt-to-income: the maximum is 50%, tested on the interest-only payment at the full line amount.
• The rent-based alternative: a DSCR cash-out refinance reaches about 75% LTV on a standard rental and qualifies primarily on the property’s rent covering the payment, subject to lender guidelines. Severance neither helps nor hurts that file.

How Is the Maximum Line Calculated?

Take 70% of the property’s value, subtract what you owe on it, and you have the ceiling. The dollar cap of $500,000 applies on top of that. Your severance amount is not an input to this formula.

Combined loan-to-value (CLTV) adds every lien on the property together and divides by its value. On an investment property, the network ceiling is 70% CLTV, and no credit tier sits above it.

Here is the math in percentages. Say a rental’s first mortgage sits at 55% of its value. The line can add up to about 15% of value. At a first mortgage of 65%, the room shrinks to about 5% of value. At 70% or above, no line is available.

Two limits can cut the number further:

• The floor: lines start at $25,000, so a thin equity cushion can leave you below the smallest line available.
• The cap: a property worth well over $700,000 with a very low balance reaches the $500,000 maximum before it reaches the 70% ceiling.

You may have read that lenders cap these lines at 80%. Experian reports a typical 80% limit across the broader market. That is a market-wide statistic. On Lendmire’s network, an investment property tops out at 70% CLTV.

Valuation is usually simple. Because an investment line cannot exceed $500,000, these files commonly run on an automated valuation with no traditional appraisal. You can still request a full appraisal. NerdWallet notes that some lenders elsewhere require more than one.

Does Severance Count as Income?

Rarely, and not for much. A personal-income line is underwritten on you: your credit, your debt-to-income ratio, and your equity. Severance is a one-time payment that ends. Most underwriters treat it as limited help at best.

Benzinga tells the story of a 61-year-old turned down for a HELOC because the lender called his early-retirement package a one-time payment, not continuing income. The article also promotes a competing product, so treat it as an illustration. It matches how traditional underwriting reads a payout that runs out in months.

Severance adds little or nothing to the income a personal-income lender will count. The debt-to-income test on this network uses a 50% maximum, calculated on the interest-only payment at the maximum draw. That is a stricter yardstick than what you plan to borrow. A documented amount and end date makes severance more usable, while an open-ended or unclear package makes it less so.

Other documented, continuing income can carry the file. Examples include retirement withdrawals, Social Security, pension income, documented rent, and a co-borrower’s wages. Lenders ask for separation paperwork and the severance letter, plus proof of whatever income continues.

One rule explains why paperwork stays narrow. Under the CFPB’s mortgage ability-to-repay rule, a lender verifies only the income and assets it actually relies on. A lender that leaves severance out does not have to document it. Lenders still set their own standards, so a smaller file is not a looser one.

When Does a DSCR Cash-Out Beat the Line?

When your paycheck is gone, a DSCR cash-out refinance often fits better, because it never asks about your paycheck. The rental is the borrower in this structure. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.

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.

For the wider picture, Lendmire’s complete DSCR loans guide walks through how the product works from start to finish. Here is how the two options compare for someone between jobs:

A few details matter beyond the table. A lease in place is expected. Coverage of 1.00 is where select programs start, and stronger ratios open better terms. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. On the investment line, credit above 700 buys eligibility rather than leverage, since 720 and 700 reach the same 70% CLTV ceiling.

Clearing 1.00 does not mean the property cash flows. The ratio compares rent to the principal, interest, taxes, insurance, and any association dues. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation, so you would need to cover those from other funds.

This is also where leverage differences show up. A cash-out refinance can reach about 75% LTV on a standard rental. A personal-income line stops at 70% CLTV. That is five points more room without a personal-income test, though the cash-out replaces your existing first mortgage and the line sits behind it. If a refinance of your existing mortgage is the real goal, the new loan’s terms matter as much as the new balance. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.

Who Cannot Use This Line at All?

Several walls apply before the math starts. The most common one for investors is title. The line requires title in an individual’s name or an inter vivos revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title.

A rental already deeded to an LLC needs a vesting change first, or the DSCR route instead. Lendmire’s piece on investment property HELOC rules for LLC-titled borrowers and how much you can borrow covers that decision in detail.

Other limits to know:

• Exposure: a borrower is limited to three lines in total. An owner with more than 15 financed properties is not eligible.
• Property types: single-family homes, 2-4 units, PUDs, townhomes, and condos (including non-warrantable condos) are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agriculturally zoned property are not offered.
• Credit: a hard floor of 700 applies to investment lines, with no tier beneath it. Credit below 700 is where DSCR cash-out becomes the realistic alternative.
• Larger needs: a line above $500,000 is available only on a primary residence, and it requires a full appraisal.
• Availability: these equity lines are offered only in Lendmire’s 16 full-service states, which is narrower than the DSCR footprint of 41 markets, including Washington, D.C.

Some investors tap a primary-residence line instead. On this network, primary-residence lines can reach 90% CLTV, but only with a credit profile of 720 or better, and lines go up to $750,000. That path requires the property to be your own home. It does not apply to the rental.

How Should You Size a Line With No Paycheck?

Borrow less than the maximum, because the structure does not forgive over-borrowing. The investment line runs a 5-year interest-only draw followed by a 25-year repayment period. At least 75% of the line is drawn at closing, and the pricing floats for the whole life of the line. It never converts to fixed.

Those three facts shape how you size it:

• The 75% draw at closing means a big line is mostly a big balance from day one. A line sized to your biggest possible need becomes a bigger commitment than you planned.
• Floating pricing means the carrying cost can change while your income is uncertain.
• The end of the draw period means the payment steps up when repayment begins, so the property’s income and your own need to carry the larger obligation by then.

NerdWallet describes a typical bank HELOC as a 10-year draw with interest-only payments. The network structure for investment properties is shorter, so do not assume a bank’s draw period applies here.

The property is also the collateral. Experian points out that a default on an investment line puts the rental itself at risk of foreclosure. Severance is a cushion that pays for the carry. It is not a qualifier, so plan the draw around what the rental covers by itself.

With a short severance runway, a smaller line is one reasonable approach. The cash-on-cash return on a big draw looks better only while rents hold. Others argue for the full line as protection against an uncertain job search. Both views have merit, but the first mortgage still limits you.

Timing and Documents

A personal-income line is easiest to close while a paycheck is visible. A job change is a real underwriting event, and the lender will look at what your income looks like going forward.

Before applying, gather these:

1. Separation paperwork and the severance letter, showing the amount and any payout schedule.

2. Proof of every continuing income source: retirement statements, a spouse’s pay records, or lease agreements.

3. The current first-mortgage statement, so the lender sees the balance for the CLTV math.

4. Your title or vesting documents, confirming it is in your name or a revocable trust.

5. A credit report. Reports must be no more than 90 days old at closing, and no rescoring is allowed.

If you are choosing between the line and a refinance, run both. The line asks about you. The cash-out asks about the rent.

Key Terms Defined

Combined loan-to-value (CLTV): all liens on the property added together, divided by the property’s value.

Equity: the property’s value minus what you owe on it.

DSCR (debt service coverage ratio): monthly rent divided by the monthly principal, interest, taxes, insurance, and any association dues.

Draw period: the stretch when you can borrow from the line and pay interest only.

Debt-to-income (DTI): your monthly debt obligations divided by your monthly income.

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. Reach the team at 828-256-2183 or request a quote. Every figure above is subject to lender guidelines and full file review, and none of it is a commitment to lend.

Severance can ease the carry on a rental, but equity and coverage decide how much it can borrow.

For current guidelines and terms, see Lendmire’s investment-property HELOC programs page.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Experian

2. NerdWallet

3. Benzinga: Early Retirement Package HELOC Rejection

4. CFPB: Regulation Z Section 1026.43