Can I Take Out a Home Equity Loan on a Rental Property I Own?

The Quick Read: Yes, but only through a small group of lenders, and the terms are tighter than on a home you live in. On the rental itself, the network Lendmire works with offers a home equity line, which is a revolving second mortgage, and it requires the property to be titled in your own name or a revocable trust.

• Investment-property lines top out at 70% CLTV (combined loan-to-value) and $500,000, with a 700 minimum credit score, subject to lender guidelines.
• An LLC cannot hold title on the equity line, so entity-owned rentals need a title change or a different product.
• The lender underwrites you, meaning your credit, income and debt load, not the rent the property collects.
• A DSCR cash-out refinance is the usual alternative. It replaces the first mortgage rather than adding a second lien, and it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.

Why Is a Rental Property Equity Loan Hard to Find?

Most lenders treat a rental as riskier than a primary home. NerdWallet reports that the pool of lenders is smaller and that you generally can’t borrow as much as against a home you live in. Bankrate adds that a line on an investment property is a second mortgage, so the rental sits behind your first lien as collateral. It also says fees and pricing are typically higher because the lender sees more risk.

The logic is simple. A borrower in trouble tends to protect the home they live in first. A vacant unit, a tenant who stops paying, or a big repair can all strain a rental owner at once.

Across the wholesale network, only a minority of lenders offer a second lien on a non-owner-occupied property. That is why the question “can I?” so often becomes “who will?”

The line is also not available everywhere. Lendmire’s full-service footprint for these equity lines covers 16 states, which is narrower than the 41-market DSCR investor platform that includes Washington, D.C.

What Does a Home Equity Line on a Rental Actually Look Like?

On an investment property, the network’s equity line has a 70% CLTV ceiling, a $500,000 maximum, and a 700 minimum credit score. Credit above 700 does not buy more leverage. Both the 700 and 720 tiers reach the same 70% CLTV cap. These figures are subject to lender guidelines and full file review.

Market surveys are stricter at the top end. NerdWallet reports that lenders commonly want a 720 score or higher for an investment-property line. The network figure for an investment line is 700.

The structure on an investment line looks like this:

• A 5-year interest-only draw period, then a 25-year fully amortizing repayment period.
• At least 75% of the line is drawn at closing.
• Pricing floats through both periods and never converts to a fixed structure.
• Debt-to-income can run up to 50%, and it is calculated on the interest-only payment at the maximum draw.
• Because the line cannot exceed $500,000, valuation is ordinarily automated, with no traditional appraisal. A higher CLTV may require a secondary valuation.

Eligible property types include single-family homes, 2-4 unit properties, PUDs, townhomes and condominiums, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agricultural properties are not offered. In several states, a property listed for sale within the past 60 days is also ineligible.

Primary residences and second homes follow different tables, and the top ceiling there reaches 90% CLTV only with a 720 or better credit profile. That higher figure never applies to a rental.

How Do You Calculate What You Could Borrow?

The ceiling works the same way for every second lien. The maximum line equals the property’s value times 70%, minus what you still owe on the first mortgage.

Consider a rental where the first mortgage is about 50% of value. That leaves roughly 20% of value available, and the $500,000 cap applies only if that number is larger. A rental with a first mortgage near 65% of value leaves a thin sliver of room.

Two quirks catch investors. First, the valuation is often automated, so your own estimate of the property’s worth may not match the lender’s number. Second, a lender that approves a line on the rental will review the first mortgage too, because the new payment sits on top of the existing one.

Use the site’s illustrative calculator to check the arithmetic, treating the result as a rough estimate and not a quote.

What Do Lenders Underwrite on a Rental Equity Line?

The lender underwrites you, not the property. The file focuses on your credit score, personal income, debt-to-income ratio and the combined equity position. Rent from the property is not the qualifying basis.

A typical file includes:

• Government ID and proof of ownership and title.
• A current statement on the first mortgage.
• Personal income documentation and a credit report. The credit report can be no more than 90 days old at closing.
• A lease or rental history on the property.

If you are self-employed, there is a bank-statement variant that reads personal deposits for income, and it is reviewed on documented income under the applicable program, subject to lender guidelines. On an investment line the 700 credit floor still applies. Bank-statement income is therefore never the binding constraint there.

Borrowers with several financed properties face exposure limits as well. A borrower is capped at three lines, and anyone with more than 15 financed properties is not eligible.

What If the Rental Is in an LLC?

An LLC cannot hold title on this equity line. Individual vesting or an inter vivos revocable living trust is required. LLCs, corporations, partnerships and land trusts are all out.

Investors with LLC-held rentals have two options. One is moving title into their own name or a revocable trust. That works mechanically, but it gives up the liability separation the LLC provided on that property, so it is worth talking through with an attorney before deciding.

The other option is a DSCR cash-out refinance, which can be made to an entity with a personal guaranty, subject to program terms. For a portfolio held in entities, that is often the cleaner path.

Home Equity Line or DSCR Cash-Out: Which Fits?

The two products solve different problems. A home equity line adds a second lien and leaves the first mortgage untouched. BiggerPockets describes the same split: a HELOC leaves the primary loan alone, while a cash-out refinance replaces it with one new loan.

The equity line fits an investor with a first mortgage worth keeping, strong personal credit and a smaller need. It also suits someone who wants reusable access to capital. The flip point comes when the first mortgage is no longer a prize, or when personal income is the weak link in the file.

The structural tradeoff runs the other way too. A second lien means two payments from one property, and the rent has to carry both.

How Does a DSCR Cash-Out Work Instead?

A DSCR cash-out is a closed-end, first-lien refinance that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR itself is an underwriting method, not a type of home equity loan. The complete DSCR loans guide explains how the method works in full.

The typical ranges across the wholesale network:

• Leverage: Cash-out tops out around 75% LTV on a standard rental, and 70% on short-term rental collateral.
• Seasoning: About 6 months of ownership is the common expectation.
• Credit: A 620 floor exists in parts of the network, most programs want around 660, and 700 or better opens the strongest leverage.
• Coverage: 1.00 is where many select programs start. A separate select-lender path goes below 1.00, with leverage and terms adjusted. Stronger coverage generally opens better pricing and leverage.
• Reserves: They vary by lender, leverage, loan size and transaction type. About 6 months of PITIA is common, and loans above $1,500,000 typically step up to about 9 months.
• Structure: The spine is the 30-year fixed. Extended terms and interest-only periods are available through select lenders, and ARM structures exist for investors who want them.

Clearing a 1.00 coverage ratio does not mean the property produces positive cash flow. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities and capital expenses sit outside the calculation.

Two situations favor this route. A self-employed investor whose traditional personal-income documentation understates income often finds rent a cleaner basis than personal documents. So does an investor whose rental sits in an LLC. If a stable, low-cost first mortgage is the main asset, a second lien may still make more sense.

Short-term rental collateral has its own terms. A purchase can reach 75% LTV, a refinance sits around 70%, and cash-out is held at 70%. Expect a 640 or better score and about 12 months of hosting history. Short-term rental rules vary by city, county, HOA and property type, so investors should confirm local rules before relying on projected rental income. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

What About Borrowing Against Your Own Home Instead?

Some investors skip the rental entirely and borrow against the home they live in, then put the cash into the rental. That is a different transaction, and it has a different risk. A line on the rental puts the rental at risk. A line on your home puts your home at risk.

Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.

An investor with a modest first mortgage, strong personal credit and a clear renovation budget may do well with a line on the rental. An investor stretching to reach the next acquisition may be better served by a DSCR cash-out that rests on the property’s own rent. If the numbers only work by using the home as backup collateral, that is worth treating as a warning sign.

Key Terms Defined

CLTV: Combined loan-to-value, which adds the first mortgage and the new line together and divides by the property’s value.

HELOC: A home equity line of credit, a revolving second mortgage with a draw period and a repayment period.

DSCR: Debt service coverage ratio, which divides monthly rent by the monthly PITIA (principal, interest, taxes, insurance and any HOA dues).

Vesting: The name or entity on the property’s title, which determines who is allowed to borrow against it.

Seasoning: The length of time you have owned the property before a cash-out is allowed.

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. Lendmire’s piece How To Get A Home Equity Loan On A Rental Property covers the application side in more depth.

The deciding variable is rarely the product name. It is whether your first mortgage, your title and your personal credit file matter more to you than the size of the check.

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

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and real estate investors in its 16 full-service states open home equity lines of credit arranged through wholesale lenders. Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. NerdWallet: Can You Get a HELOC on an Investment Property?

2. Bankrate: HELOC on an Investment Property

3. BiggerPockets: Cash-Out Refinance vs. HELOC