The Quick Read: A home equity line on a rental is tested on your personal income. Commission and bonus count only when a lender can document them, average them, and rely on them. Through Lendmire’s network, an investment-property line tops out at 70% CLTV and $500,000, with a 700 credit floor. If your variable pay is too uneven to document, a DSCR cash-out refinance tests the rent instead.
- Income gate: the lender decides how much of your variable pay to use.
- Debt gate: debt-to-income (DTI) is tested at 50% maximum, and the payment is calculated on the full line, not on what you have drawn.
- Property gate: an investment line allows up to 70% combined loan-to-value (CLTV), a $500,000 maximum line, and a 700 minimum score.
- Title gate: the borrower must hold title personally or in a revocable living trust, not in an LLC.
- Alternative: a DSCR cash-out refinance qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Key Terms Defined
Variable income is pay that changes from period to period, such as commission, bonus, and overtime.
Income averaging means a lender adds up your variable pay over a set history and divides it across that period, so one big month cannot carry the file.
DTI (debt-to-income ratio) is your total monthly debt payments divided by your gross monthly income.
CLTV (combined loan-to-value) is all liens on the property, including the new line at its full size, divided by the property’s value.
DSCR (debt service coverage ratio) is the property’s monthly rent divided by its monthly PITIA, which is principal, interest, taxes, insurance, and any association dues.
HELOC is a home equity line of credit, a revolving line secured by property you already own.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
What Is a Rental HELOC, and Why Does Your Pay Structure Matter?
A rental HELOC is a revolving credit line secured by an investment property you own. It sits behind or beside your existing mortgage, and it is underwritten mainly on you, the borrower.
That last part is why commission earners feel the squeeze. The lender asks whether your income supports every monthly debt you carry, with the new line included. A salaried borrower answers that with one pay stub. A borrower with a small base and large commissions answers it with a history.
The line itself is a standalone product in first or second lien position. On an investment property, it runs a 5-year interest-only draw followed by a 25-year fully amortizing repayment. At least 75% of the line is drawn at closing. Pricing is variable and never converts to fixed, so the payment can move over the life of the line.
Rental HELOC availability through Lendmire’s wholesale partners is limited to its 16 full-service states. That footprint is narrower than the 41-market DSCR footprint, so confirm eligibility early.
How Underwriting Treats Commission and Bonus, Step by Step
Underwriting treats commission and bonus as usable income only after the lender chooses to rely on it, documents it, and averages it. The process runs in a fixed order. Each step can shrink the income number that reaches the DTI test.
Step 1: The lender decides which income it relies on. 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. A HELOC is different, because it is tested on your personal income.
The CFPB’s rule text uses a borrower with salary plus an annual bonus as its example. If the lender relies on salary alone, it verifies only the salary.
For you, that means a lender can underwrite base pay only. It can also underwrite base plus averaged commission. Neither choice is wrong. The second choice usually needs more paperwork.
Step 2: The lender sets the averaging rule. No federal formula says how to average variable pay. The official interpretations state that the ability-to-repay provisions do not provide comprehensive underwriting standards. Averaging rules come from each lender’s own guidelines.
Bonus, commission, and overtime are usually averaged over a history and sometimes discounted. A two-year history is the common convention. The agency mortgage world uses the same idea: add two years of commission and divide by 24, as one third-party explainer of that rule lays out. That is a contrast point only, because agency rules do not govern a rental HELOC.
Step 3: The lender checks the trend. If your commission is falling, a lender may use the lower year instead of the average. It may also discount the income or leave it out. A rising trend helps, but the average still lags behind your best year.
Step 4: The lender counts the new debt at full size. The payment is calculated as interest-only on the maximum draw. A line you have not touched still counts as if fully used. That surprises many borrowers, because the balance is zero and the DTI hit is not.
Step 5: The lender applies the DTI ceiling. DTI tops out at 50% across the network. A ratio above 45% requires at least a 680 score. An investment line already floors at 700, so that condition is met by default.
Step 6: The lender decides what rent can do. Even when rent counts, Schedule E depreciation and write-offs can shrink the net contribution. Rental income may therefore add little to a file that is thin on documented personal income.
Step 7: The lender checks equity and title. Only liens on the subject property count toward CLTV. Mortgages on your other rentals do not enter CLTV, but they do feed DTI.
What Counts, and What Proof Do Lenders Ask For?
Every pay type has its own proof. The table below shows how a lender typically treats each one on a DTI-tested line.
| Pay type | Typical treatment | Typical proof |
|---|---|---|
| Base salary | Counted at current level | Pay stub, employment check |
| Commission | Averaged over a history | Prior W-2s, recent stub |
| Bonus | Averaged, sometimes discounted | W-2s, bonus letters |
| Side or 1099 income | Net of write-offs | Tax returns, P&L |
| Rental income | May be partly credited | Leases, tax returns |
Treat the table as a typical pattern, not a guarantee. Terms vary by lender and by file.
Self-employed and 1099 commission earners face a harder version of the same test. Lenders usually work from net income after write-offs, not gross revenue. Multi-year returns are typical, often alongside a profit-and-loss statement and bank statements. If you write off aggressively, your tax return tells the lender you earn less than your bank account suggests.
A practical document stack for a variable-pay borrower typically includes:
- Your most recent pay stub and two years of W-2s.
- A written employment verification that describes how your commission is paid.
- Two years of full tax returns, with Schedule C if any commission arrives on a 1099.
- Leases and current mortgage statements for every financed property.
- Business bank statements, if you plan to use a deposit-based route.
A Worked Example: Base Pay, Commission, and Rent
Consider a modeled borrower, with every input an assumption rather than a market figure. Base pay is a small share of total earnings. The rest is commission that has grown over two years.
Base pay only: total DTI lands near 56% with the new line’s maximum-draw payment included. That is above the 50% ceiling.
Base plus two-year average commission: DTI drops to roughly 39%. The same borrower now clears the test with room to spare.
Base plus the lower of two years, after a weak second year: DTI sits near 47%. That passes the 50% ceiling, and the borrower’s 700-plus score covers the 680 requirement above 45%.
These are illustrative percentages, not predictions. The point is the swing. The same person can fail or pass depending on which income the lender chooses to rely on. Ask the lender, before you apply, which income it will use.
Rent adds a wrinkle. If the lender credits part of the rent against the property’s own debt, DTI improves. If it waits for rent to season on tax returns, the rent counts for nothing in the first year of ownership. Do not assume the offset exists.
What Are the Property Requirements on This Network?
An investment-property line has a short list of hard limits. They apply no matter how strong your income looks.
- Leverage: up to 70% CLTV. Credit above 700 buys eligibility, not extra leverage, because 720 and 700 both reach the same ceiling.
- Line size: a maximum of $500,000 on an investment property, with a $25,000 minimum line.
- Credit: a 700 minimum, with a single-bureau score model and a report no more than 90 days old at closing.
- Valuation: lines at or below $500,000 ordinarily run an automated valuation instead of a traditional appraisal. You can request a full appraisal in any case.
- Property types: single-family, 2-4 units, PUD, townhome, and condominium, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not eligible.
- Exposure: a borrower is limited to three lines. A borrower owning more than 15 financed properties is not eligible.
Market surveys report that some lenders go up to 80% on rentals, as White Coat Investor’s rental HELOC guide describes. On this network, an investment line stops at 70% CLTV.
Primary-residence lines work differently. They can reach 90% CLTV, and that tier exists only at a 720-or-better credit profile. That difference is why some investors borrow against their home to fund a rental, which puts the home at risk instead of the rental.
To shop lenders, the brokerage also covers where to get an investment property HELOC when picking a lender for a rental property.
Where the General Rule Breaks
Several situations bend the normal path. Each one changes the answer for a commission earner.
Fewer than two years of commission history. The two-year convention is a convention, not a law. A lender that wants two years may rely only on your base pay until the history exists. Programs differ, and the lender’s guidelines decide.
Declining or uneven income. Averaging can be replaced by the lower year. Some lenders drop the variable income entirely. Because the lender averages, one strong year may count for less than you expect.
Write-offs that shrink income on paper. A high earner with heavy deductions can show a low net number. A DTI-tested line reads the tax return, not your lifestyle.
Deposit-based income. A bank-statement route is reviewed on documented income under the applicable program, subject to lender guidelines. The lender builds an adjusted deposit history and excludes transfers and one-time deposits. Thin or irregular deposits weaken the DTI test. On an investment line, bank-statement income is never the binding limit, because the 700 score floor sits above the 680 minimum that business-account analysis requires.
LLC title. The borrower must hold title individually or in a revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. A property already deeded to an LLC needs a vesting change, or a different product.
Properties that fall outside the network. Manufactured homes, log homes, and barndominiums are not offered on any DSCR program in the network, and they are not eligible for the line either.
Is a DSCR Cash-Out a Better Fit for Variable Earners?
For many commission earners, a DSCR cash-out refinance fits better than a line on the rental. It tests the property’s rent against its monthly PITIA, so personal income is not part of the calculation. Your commission history stops being the issue.
It is a different product, and the tradeoffs are real:
| Factor | Rental HELOC | DSCR cash-out refinance |
|---|---|---|
| What is tested | Your income and DTI | Rent versus PITIA |
| Existing first mortgage | Stays in place | Replaced |
| Max leverage (investment) | 70% CLTV | Around 75% LTV on standard rentals |
| Structure | Revolving line | Lump sum |
| Title | Individual or revocable trust | LLC possible, subject to lender program eligibility |
Here is how the DSCR side usually runs across the network. Cash-out tops out around 75% LTV on standard rentals, and about 6 months of seasoning is the common expectation. Most programs want a score around 660, and 700 or better unlocks the strongest leverage. A 620 floor exists in parts of the network.
On coverage, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Stronger ratios open better pricing and higher leverage.
Reserves vary by lender, leverage, loan size, and transaction type. About 6 months of PITIA is a common figure. Larger loans often step up from there.
Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation, so budget for them separately.
A DSCR file also cannot be rescued by assets. A property whose rent fails the coverage test does not pass because you have savings. The loan reads the property, not your bank balance. The brokerage’s complete DSCR loans guide walks through how that coverage test works.
How to Choose Between the Routes
Match the product to your income profile and the property.
1. Your income documents cleanly and the DTI works. A rental HELOC suits you, and it leaves your existing first mortgage untouched.
2. Your tax returns understate your real earnings, and your deposits are steady. A deposit-based route may fit, subject to lender guidelines.
3. Your variable income is uneven, or write-offs shrink your net income. A DSCR cash-out takes personal income out of the test.
4. The rent barely covers the payment. Both routes get tighter, so run the coverage number before you apply.
One caution applies to every route. Every drawn or available line dollar can reduce your capacity to finance the next rental on any DTI-tested loan. If you plan to buy again, count that cost now.
Using a line for a down payment can also push a purchase toward 100% financing, so the monthly payment has to come from real cash flow. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
Mistakes That Hurt Variable-Income Files
- Applying after one strong year. The lender averages, so the history works against you if last year was a spike.
- Ignoring the maximum-draw payment. You qualify on the full line, not the balance you plan to use.
- Counting rent that is not seasoned. A new lease may not count toward DTI at all.
- Moving money between accounts before a deposit review. Transfers are excluded, so they add noise without adding income.
- Holding title in an LLC. The line cannot close that way, so fix the vesting first.
- Mixing up the two tests. A DTI-tested line and a DSCR loan ask different questions. Preparing for one does not prepare you for the other.
Frequently Asked Questions
Can commission and bonus income qualify me for a rental HELOC?
Yes, when it is documented and has a history, usually two years. The lender averages it and may discount it if the trend is falling. A lender can also choose to rely on your base pay only, which means the variable income is never counted.
Does a zero balance keep the line out of my DTI?
No. On a DTI-tested file, the payment is calculated as interest-only on the maximum draw. An untouched line counts as though fully drawn. Size the line to what you will actually use if you plan to finance another property.
What credit score does an investment-property line need?
A 700 minimum applies on this network, and credit above 700 does not raise the 70% CLTV ceiling. Eligibility is subject to lender guidelines and a full file review.
Can my LLC hold title to the property for a rental HELOC?
No. The borrower must be an individual or a revocable living trust. If the property already sits in an LLC, you need a vesting change or a DSCR cash-out refinance instead. LLC title on the DSCR side is available subject to program terms.
When does a DSCR loan work better than a HELOC for a commission earner?
It works better when your personal income is hard to document or write-offs shrink it, because the DSCR loan is reviewed primarily on property-level rental income covering the payment. It replaces your first mortgage with a lump sum, so it is a different tool. Run the coverage ratio first.
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 is a broker that arranges financing through select lenders in its wholesale network, and every figure here is subject to lender guidelines and not a commitment to lend. The calculator on this page gives an illustrative estimate only.
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.
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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. CFPB, Regulation Z § 1026.43, Minimum standards for transactions secured by a dwelling
2. Cornell Law School LII, Supplement I to Part 1026, Official Interpretations
3. homebuyer.com: Commission Income
4. White Coat Investor, HELOC on investment property
This article is part of Lendmire’s investment property HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Portfolio DSCR Cash-Out Refinance Requirements When Deciding Whether to Refinance a Rental · Short-Term Rental Cash-Out Refinance Requirements Through a Bank Versus a Non-Bank Lender · Where to Get a DSCR HELOC When the Rental Property Value Is Small
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.