The Quick Read: Under a 660 credit score, a DSCR cash-out refinance is the only one of these two options that may still be on the table. The DSCR HELOC in Lendmire’s wholesale network starts at 700 on a first lien and 720 on a second lien. Cash-out programs vary by lender and tighten leverage and reserves at lower scores.
- A DSCR HELOC is a revolving line on a rental, qualified on the property’s rent. Typically it requires a 700 credit score on a first lien and 720 on a second lien, subject to underwriting.
- A DSCR cash-out refinance replaces your first mortgage with a larger loan. The rent still drives lender review, but credit floors differ by program.
- Below 660, the HELOC is out of range on this network. Cash-out may work only through narrower programs, usually with lower leverage and more reserves.
- Neither option is a sure thing. Both depend on the property, the rent, the equity and the lender’s review.
Here is the honest answer. The DSCR HELOC suits an owner with a score of 700 or better who wants to keep a low first mortgage and pull equity in draws. The cash-out refinance suits an owner who needs a bigger lump sum, is willing to replace the existing loan, and may sit below the HELOC’s credit score floor. If your score is under 660, the HELOC question is mostly settled. The real work is deciding whether a cash-out makes sense now or after your score improves.
Side-by-Side
The DSCR HELOC column below shows the guidelines Lendmire’s wholesale network uses, subject to underwriting. The cash-out column shows published industry norms, which vary by lender and program.
| Factor | DSCR HELOC (network) | DSCR cash-out (industry norms) |
|---|---|---|
| Review basis | Rent covers a stressed payment | Rent covers the new full payment |
| Personal income docs | Not used | Generally not used |
| Lien position | Standalone 2nd lien, or 1st lien if paid off | New first lien |
| Existing first mortgage | Stays in place | Paid off and replaced |
| Credit floor | 700 first lien, 720 second lien | Varies; some programs go below 660 |
| Leverage | Up to 70% CLTV (2nd); up to 75% LTV (1st) | Tiered by score; tighter at low scores |
| How funds arrive | Revolving; 5-year interest-only draw | One lump sum at closing |
| LLC vesting | Allowed, subject to program eligibility | Commonly allowed with a guarantor |
| Seasoning | 6 months of ownership | Often several months |
| Reserves | None required | Commonly required; more at low scores |
Two terms in that table deserve a plain definition. A second lien is a loan that sits behind your first mortgage. CLTV is combined loan-to-value: the first mortgage balance plus the new line, divided by the property’s value.
When a DSCR HELOC Is the Better Fit
A DSCR HELOC fits best when your credit is 700 or higher and you want to keep the first mortgage you already have. It is a standalone second lien behind that mortgage, or a standalone first lien on a rental with no mortgage. Either way, it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
The structure rewards owners who already hold cheap, long-term first-mortgage debt. You keep that loan untouched. You add a line behind it instead of resetting everything. For a portfolio investor with several financed rentals, that is a real advantage.
The leverage runs lower than many investors expect. On a second lien, the program typically tops out at 70% CLTV at a 720 score or better, on lines from $50,000 to $500,000. On a paid-off rental, a first-lien line reaches 75% LTV at 740 or better and 70% from 700 to 739. Lines above $500,000, up to $1,000,000, carry a 65% ceiling. All of these are ceilings and subject to underwriting, not offers.
The rent test is also stricter than a simple payment check. The minimum is 1.10x, and the payment used is a stressed, fully amortizing payment on the entire credit limit, not only the drawn balance. A line that is mostly undrawn still has to pass as if it were fully used. The lender’s own calculation governs, and a lease must be in place.
The draw rules matter too. At least 80% of the line is drawn at closing, so this is not a tiny standby line. Later draws are at least $5,000 each. The draw period is five years, interest-only on the drawn balance. Then a 25-year repayment period follows, inside a 30-year maturity. The rate is variable.
The CFPB describes a HELOC as an open-end line you can borrow against repeatedly, which is the revolving feature that separates it from a one-time loan. That consumer guidance explains the basic structure. Investor lines are a narrower niche, and the credit floors above come from the network’s own program, not from the regulator.
A few property rules narrow the field. Rural-designated property, condotels, row homes and leaseholds are outside the program. The borrower must be a U.S. citizen, a permanent resident, or a non-permanent resident with a Social Security number. The program is offered in 15 of Lendmire’s 16 licensed states, every licensed state except Tennessee, so availability depends on where the property sits.
When a DSCR Cash-Out Refinance Is the Better Fit
A DSCR cash-out refinance is the better fit when your score sits below the HELOC’s floors, when you want a single lump sum, or when the existing first mortgage is not worth protecting. The new loan pays off the old first lien. You receive the difference between the new balance and the payoff, less closing costs, reserves and any prepayment charge on the old loan.
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 you, that means the rent and the property carry the file. Your personal income is generally not the test.
Credit still matters. Programs differ, and a few go below 660, but they usually pair a lower score with tighter terms. Expect lower leverage than a stronger-credit borrower would see. Expect larger reserve requirements. Expect a guarantor, meaning the person who signs personally to back a loan held in an LLC. When several people guarantee a file, many programs look to the lowest middle score among them. Each of these is a typical pattern across published industry programs, and each is subject to the lender’s review.
The coverage math also works against you on a cash-out. A bigger loan means a bigger payment, so your rent-to-debt ratio falls as you pull more equity. A rental that clears 1.2x today may land closer to 1.0x after a large cash-out. Programs that accept coverage below 1.00 exist through select lenders in the network, but leverage and terms adjust when they do.
Picture an investor with a 640 score who owns a duplex with a large share of equity, a lease in place and a modest first mortgage. The HELOC is not available at that score. A cash-out might be, if the rent covers the new, larger payment and the lender accepts the credit at a reduced leverage tier. The cost of that route is the loss of the old first mortgage.
For the broader picture of how rent-qualified loans work, Lendmire’s complete DSCR loans guide covers qualification, documents and structures in more detail.
What Changes as Your Score Moves
Credit score bands decide which door opens first. Here is how the two products line up, using the network’s HELOC floors and general industry patterns for cash-out.
- Under 660: The DSCR HELOC is not available on this network. A DSCR cash-out may exist through narrower programs, typically with lower leverage and more reserves. Some specialty programs go lower still, trading flexibility for much less leverage.
- 660 to 699: The HELOC is still out of range. Cash-out terms generally improve as the score rises, but the exact tiers vary by program.
- 700 to 719: A first-lien HELOC opens up, but only on a rental with no mortgage, at up to 70% LTV. A second lien still needs 720.
- 720 and up: Both lien positions work on the HELOC, with a second lien up to 70% CLTV. A cash-out generally reaches its better leverage tiers too.
The HELOC also asks for clean mortgage history. There can be no 30-day late payment in the last 12 months, and 48 months must pass since a bankruptcy, foreclosure, short sale or deed-in-lieu. If a past event is behind a sub-660 score, that clock matters on both routes.
Costs and Risks Worth Weighing
The HELOC’s biggest risk is that it is a revolving, variable-rate line. The payment moves with the drawn balance and the rate. The CFPB’s HELOC booklet notes that lenders may freeze or reduce a line if the property’s value falls or the borrower’s circumstances worsen. Do not plan a rehab around money you cannot count on drawing later. The rate and the pricing terms come with the lender’s disclosures.
The cash-out’s biggest risk is the reset. You give up the existing first mortgage and take on a new, larger one. Industry programs often add a prepayment charge, so exiting early can cost you. A sub-660 borrower may also accept lower leverage and larger reserves, which shrinks the cash that actually reaches you.
Equity is rarely as large as it looks. Payoff, costs, reserves and the rent test all reduce proceeds. Lump-sum cash-out proceeds can also push the coverage ratio below what a program will accept. Run the coverage ratio before you assume a number.
Lendmire’s piece Investment Property Cash-Out Refinance vs DSCR HELOC Under an LLC goes deeper on vesting. If an LLC holds title, a cash-out generally needs a personal guarantee, and the HELOC members sign as guarantors as well. The LLC separates the property from your other assets, but it does not remove the guarantor’s obligation on the loan.
The Balanced Verdict
If your score is 700 or higher, the DSCR HELOC deserves a look first, because it preserves a low first mortgage and gives you flexible draws. If your score is under 660, the HELOC is not a realistic option on this network. A cash-out is the path to price out, with the understanding that terms tighten and approval is subject to underwriting.
A third path is waiting. A score that climbs from the 640s toward the mid-600s may improve your options on a cash-out refinance, though the HELOC floor sits higher and approval is subject to underwriting. If you are not in a hurry, six months of on-time payments, lower card balances and a clean credit report may move a file more than any structure change.
Honestly, this is a genuine toss-up for borrowers in the 690s. A small score gain can unlock the HELOC, but a cash-out you can use now may be worth more than waiting.
Frequently Asked Questions
Can I get a DSCR HELOC with a 640 credit score?
Not on this network. The DSCR HELOC typically requires a 700 score on a first lien and 720 on a second lien, subject to underwriting. At 640, a DSCR cash-out refinance through a program that accepts lower scores is the more realistic route, usually with tighter leverage and more reserves.
Is a cash-out refinance easier than a HELOC with bad credit?
Usually, because cash-out programs are more numerous and some accept lower scores. Easier does not mean easy. Lower scores typically bring lower leverage, larger reserves and a guarantor requirement. Each file is reviewed on the property, the rent and the borrower’s credit.
Does a cash-out refinance hurt my DSCR?
It lowers your coverage ratio on that property. The new loan is larger, so the payment is larger, and the same rent covers less of it. The more equity you pull, the more the ratio falls. A property that clears the lender’s minimum before the cash-out may not clear it after.
Can my LLC take a DSCR HELOC?
Yes, subject to program eligibility. The members sign as guarantors, and a title holder who is not a borrower signs a non-borrowing owner acknowledgment. The LLC does not remove personal responsibility for the loan.
How soon after buying can I tap equity?
On the DSCR HELOC, a rental bought or refinanced in the last 6 months is not eligible, and 6 months of ownership are required. Cash-out programs set their own seasoning periods. Many look for a few months of ownership, so confirm the program’s rule before you plan around it.
Where to Go From Here
If you are weighing a cash-out or a home equity line on a rental property and want to see how the numbers work, Lendmire can help. With a score under 660, that usually means a DSCR cash-out refinance. At 700 or higher, it can also mean a DSCR HELOC. The comparison turns 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.
The next move for most sub-660 owners is the same: get the rent, the lease and the credit report in front of a broker before choosing a structure. Equity does not expire, but the right door depends on the score.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and real estate investors in its 16 full-service states. Home equity lines of credit are arranged through wholesale lending channels; Lendmire brokers the line and the lender underwrites each application under its occupancy-based guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
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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
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 vs DSCR Cash-Out Refinance Before Your Return Is Filed · DSCR HELOC vs DSCR Cash-Out Refinance for Using Home Equity on an Investment Property · DSCR HELOC vs DSCR Cash-Out Refinance on a Rental Property for Landlords
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.