The Quick Read: No single provider is the best for every owner, because the program that fits depends on the property, the equity, the credit profile, and how the income is documented. Lendmire is a mortgage broker, not a lender, and it matches each file to a wholesale HELOC lender whose guidelines fit the scenario.
- Self-employment does not bar a home equity line. The hurdle is proving income when write-offs shrink the net figure.
- The occupancy of the property sets the ceiling. An investment line tops out at 70% CLTV, while a primary-residence line reaches 90% CLTV only at a 720 or better credit profile.
- Debt-to-income is capped at 50% on this network, and it is measured on documented net income, not gross sales.
- Entities cannot hold title. An LLC-owned property needs a different route.
- A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so it sits outside the owner’s tax-return income problem.
Many restaurant and trades owners start by looking for a ranked list of providers. A ranked list would be the wrong answer here. The right program depends on the file, and this article explains what these lenders look for, how the programs work, and who fits.
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.
How Does a HELOC Work for a Business Owner?
A HELOC is revolving credit secured by a home you already own. The lender sets a limit from the home’s value less existing liens, and you draw against it. The federal consumer-finance regulator’s older HELOC booklet shows the limit as a percentage of appraised value minus the mortgage balance.
Nothing about that changes because you own a kitchen or a crew. What changes is the income side. A salaried borrower hands over a pay stub. An owner hands over tax returns that were built to reduce taxable income.
Lendmire works with a network of wholesale HELOC lenders and matches the scenario to the program. These lines are available only in Lendmire’s 16 full-service states, which is narrower than its 41-market DSCR footprint. Every figure here is subject to lender guidelines and full file review.
Key Terms Defined
CLTV: Combined loan-to-value, meaning all liens on the property divided by its value.
Draw period: The stretch when you can borrow against the line, usually interest-only.
Repayment period: The stretch after the draw ends, when the balance fully amortizes.
DTI: Debt-to-income ratio, meaning monthly debts divided by documented monthly income.
Documented net income: Income after business deductions, which is what underwriters count.
Vesting: The name or entity that holds title to the property.
How Does Underwriting Treat a Restaurant or Trades Owner?
Underwriting treats the owner as a borrower whose income must be rebuilt from documents. The lender looks at equity, credit, DTI, and the documentation path. The first three work the same as for anyone. The fourth is where owners diverge.
Here is the sequence, step by step.
1. Equity is sized. The lender takes the property value, subtracts existing liens, and applies the CLTV cap for the occupancy and credit tier.
2. Credit is pulled. The network uses a single-bureau score keyed to the primary wage earner. The report can be no more than 90 days old at closing, and there are no rescores.
3. Income is documented. Tax returns, profit and loss statements, and bank statements are the common paths. Lenders count net income after deductions, not gross sales.
4. DTI is calculated. The maximum is 50%, and 45% for credit profiles from 600 to 679. A ratio above 45% requires a 680 minimum. The line is qualified on the interest-only payment calculated on the maximum draw.
5. Valuation is ordered. Lines at or below $500,000 ordinarily run an automated valuation. A full appraisal is required on every line above $500,000, and a borrower may request one in any case.
The friction point for restaurant and trades owners is step three feeding step four. Depreciation, equipment write-offs, and owner draws lower the net number. A strong year of cash flow can look thin on paper, and a loss year can pull qualifying income down further.
What Do Restaurant Owners Need to Prepare?
Restaurant income is uneven by nature. Card sales, tips, seasonal swings, and owner draws all show up differently on a return than in the deposit account. Prepare a clean package before applying.
- Personal and business income documentation that shows the owner’s net income.
- A current profit and loss statement that reconciles to the returns.
- Proof of business ownership.
- Bank statements that match the stated business activity.
- A schedule of all existing liens on the home and any personal guarantees on business debt.
Lenders look at documented income under the applicable program, subject to lender guidelines. If a program accepts bank statements, it does not count deposits dollar-for-dollar. An expense factor is applied, so a high deposit total does not translate into the same qualifying income.
What Do Trades Owners Need to Prepare?
Trades income runs in lumps. Project payments, subcontractor costs, and equipment purchases push monthly income up and down.
- A list of active contracts or recurring customers.
- Documentation of equipment financing, so the lender sees which debts the business carries.
- Separation of personal and business accounts, so bank statements read cleanly.
If an owner also has W-2 or other income, some lenders combine it with business income. Ask whether the program allows it before you apply.
What Are the Network’s Program Limits?
The occupancy of the property sets the ceiling, so quote the right one. The network offers a standalone line in first or second lien position. Line sizes run from $25,000 to $750,000, and Michigan’s floor is $10,000.
| Occupancy | Max CLTV | Min credit | Max line |
|---|---|---|---|
| Primary residence | 90% CLTV, only at 720+ | 600 | $500,000 at 90% CLTV; $750,000 at 75% CLTV, 700+ (720 on the longer-runway program) |
| Second home | 90% CLTV, only at 720+ | 640 | $500,000 |
| Investment property | 70% CLTV | 700 | $500,000 |
On a primary residence, a line above $500,000 requires a credit profile of 700 or better (720 on the longer-runway structure). It caps at 75% CLTV and requires a full appraisal. Investment properties never go above 70% CLTV, and they run only the 5-year draw and 25-year repayment structure.
On this network, the figures in the table above govern.
What Draw Structures Exist?
Two draw structures exist on primary residences and second homes. One has a 3-year interest-only draw with a 17-year fully amortizing repayment. The second is a 5-year interest-only draw followed by a 25-year fully amortizing repayment. Tennessee shortens both, to 3 years and 12 years, and 5 years and 10 years.
At least 75% of the line is drawn at closing on both structures. Pricing floats across the draw and repayment periods and never converts to fixed. After closing, the minimum subsequent draw is $1,000, except in Texas, where it is $4,000. The 5-year draw with 25-year repayment is the only structure on investment lines.
For an owner, the payment-shock point is the end of the draw. The line moves from interest-only to full amortization, so plan the cash flow for that step well before it arrives.
Where Does the General Rule Break?
Several edge cases catch restaurant and trades owners.
The property sits in an LLC. Title must be held by the individual borrower or an inter vivos 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 DSCR cash-out instead.
The property is a business-use building. Commercial, mixed-use, and agricultural zoning are not eligible. A shop with an apartment above it falls outside these programs.
The home type is not eligible. Manufactured homes, co-ops, condotels, and log homes are not offered. Single-family, 2-4 units, PUD, townhome, and condominium, including non-warrantable, are eligible.
Credit history has marks. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure-family history splits by program on primary residences and second homes. One program seasons a foreclosure in 7 years and a deed-in-lieu, pre-foreclosure, or short sale in 4. The other declines the history entirely, regardless of age.
The owner holds many properties. A borrower is limited to three lines, with combined exposure capped at $2,000,000 on the higher-leverage program and $750,000 on the longer-runway program. A borrower owning more than 15 financed properties is not eligible.
Sub-640 credit. Profiles below 640 are limited to single-family residences with a clean 12-month housing history under the longer-runway program. Second homes floor at 640 and investment lines at 700, so only primary residences can be affected by this limit.
Texas. A primary residence there is a homestead, and it caps at 80% combined loan-to-value. A 12-day waiting period, the one-lien-at-a-time rule, and 12-month seasoning also bind primary residences only.
Should the Line Fund a Down Payment on a Rental?
Many owners use home equity to fund a rental purchase. Whether a given DSCR lender allows borrowed down payment funds is a guideline question, so confirm it early.
The stacking effect matters. The rent has to cover the new loan payment, and the owner also carries the HELOC payment. A borrowed down payment can push total financing close to the full purchase price. The DSCR calculation compares rent to the payment on the new loan only. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, and utilities sit outside the ratio.
DSCR purchase loans typically land at 75% to 80% LTV, with select programs reaching 85% LTV at roughly a 700+ score. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. That is why owners with deduction-heavy returns often look at it for the rental itself. For a deeper look at the option, see Lendmire’s complete DSCR loans guide.
Order matters for lien position. A HELOC placed first can complicate a later DSCR cash-out on the same property, so map the sequence before you open anything.
How Does This Compare With Other Routes?
| Route | Tied to | Income test | Best fit |
|---|---|---|---|
| HELOC | A home you own | Documented net income, DTI | Owners with equity and clean returns |
| DSCR purchase | The rental being bought | Property rent vs payment | A new rental with strong coverage |
| DSCR cash-out | A rental you own | Property rent vs payment | Pulling equity from an existing rental |
On a DSCR cash-out, leverage tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation. Short-term rentals run lower. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
What Should Owners Ask Before Applying?
Ask the broker these questions, and gather answers before any credit pull.
- Which occupancy applies, and what CLTV ceiling goes with it?
- Does the program count bank statements, and what expense factor applies?
- Is the title held personally or in a trust?
- Do I have personal guarantees or liens that the lender will see?
- What happens to the payment when the draw period ends?
- Does a prepayment penalty on any other loan affect my plan?
A broker that shops multiple wholesale lenders can match the answers to the program. Lendmire also covers a related file type in its piece Top Investment Property HELOC Providers as a Self-Employed Business Owner.
What Are the Risks?
The home is the collateral. If the business slows and the line cannot be repaid, the home is at risk. Payments float, and a stress test at a higher payment is a sensible habit before you draw.
A HELOC also has to be repaid when the home is sold. The CFPB’s current booklet says that if you sell your home, you are generally required to pay off your HELOC in full immediately.
Using a HELOC as permanent working capital is a common drift. A draw plan for a build-out, equipment, or a payroll gap, with a repayment path, keeps it from becoming a standing cushion.
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.
Frequently Asked Questions
Can a restaurant or trades owner get a HELOC?
Yes. Self-employment does not bar approval. The lender needs documented net income that supports the DTI limit, and the documentation path, such as tax returns or bank statements, depends on the program.
What is the highest CLTV available on an investment property?
Seventy percent CLTV, with a 700 minimum credit score and a $500,000 maximum line. No tier sits above that on an investment property. A 90% ceiling applies only to primary residences and second homes at a 720 or better credit profile.
Can an LLC hold the property for a HELOC?
No. Title must be held by the individual borrower or a revocable living trust. A property already in an LLC needs a vesting change, or a DSCR cash-out may fit better.
Does the lender count my gross sales as income?
No. Lenders use documented net income after business deductions. Bank-statement programs apply an expense factor, so deposits do not count dollar-for-dollar.
How do I find the right provider?
The best fit depends on the property, equity, credit, and documentation. A broker that shops multiple wholesale lenders can match the file to the right program.
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. Call 828-256-2183 or request a quote.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) arranging home equity lines of credit — primary-residence, second-home and investment-property lines — through a wholesale lending network in its 16 full-service states. Eligibility is determined by the lender on each file. 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 HELOC booklet (2014 version)
2. CFPB HELOC booklet (current)
This article is part of Lendmire’s HELOC & home equity loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can You Borrow With a DSCR Cash-Out Refinance as a Repeat Fix-and-Flip Investor? · 5 DSCR Cash-Out Refinance Options to Compare Lenders on Terms and Fees Before Choosing · What Is a DSCR HELOC With a 1007 Rent Schedule Appraisal?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.