The Quick Read: No single provider is the right pick for every buyer, because the program that fits depends on the equity in your primary home, your credit profile, the occupancy of the property securing the line, and whether the second-home lender accepts borrowed down-payment funds. A home equity line (HELOC) turns equity into cash you can use as a down payment. It does not replace the purchase loan, and it adds a second monthly obligation on top of the first mortgage.
- A HELOC is a line of credit secured by a home you own, and the purchase loan on the second property is a separate file.
- On this network, a second-home line reaches 90% combined loan-to-value (CLTV) only at a 720 or better credit profile, and an investment-property line stops at 70% CLTV.
- Two wholesale programs sit behind the network, and the terms of each are laid out below.
- Subject to lender guidelines, the second-home or rental loan still has to clear its own leverage, credit, reserve, and property rules.
Lendmire is a mortgage broker, not a lender. It shops several wholesale lenders and matches the file to the program that fits. That is why this article gives you the criteria and the numbers, not a ranked list of companies.
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.
Why There Is No Single Top HELOC Provider
The best program for your situation depends on four things: the home that secures the line, your credit, how much you need to draw, and how the second property will be financed. A provider that suits a borrower with a 720 score and a primary residence may not suit a borrower with a 650 score and a rental.
Lists that rank providers usually score them on speed, fees, and brand. Those factors matter less than fit. A line that is cheap to open but bars use for a second-property purchase is useless for this plan.
A broker sees the guidelines of several wholesale HELOC lenders side by side. The lenders that write a given file depend on occupancy, credit tier, line size, state, and property type. The sections below show what those lenders look for, so you can judge any provider, with or without a broker.
Key Terms Defined
HELOC (home equity line of credit): A revolving line of credit secured by a home you own, which you draw on as needed up to a set limit.
Home equity: The home’s value minus what you still owe on the mortgage.
CLTV (combined loan-to-value): Your first mortgage plus the new line, divided by the home’s value.
Draw period: The stretch when you can borrow from the line, usually interest-only on the programs described here.
Repayment period: The stretch after the draw period when the balance amortizes, meaning principal and interest are both paid down.
DTI (debt-to-income ratio): Your monthly debt payments divided by your monthly income.
DSCR (debt service coverage ratio): A property’s monthly rent divided by its monthly PITIA, which stands for principal, interest, taxes, insurance, and any association dues.
Source of funds: The paper trail showing where your down payment came from.
How the Process Works, Step by Step
The sequence matters. The line has to exist before you shop, and the purchase lender has to accept it.
1. Measure your equity. Lenders set a credit limit by taking a percentage of your home’s appraised value and subtracting what you owe, as the federal consumer-finance regulator’s HELOC booklet explains. The percentage varies by provider and by your credit profile.
2. Apply for the line. The line is underwritten to you and the home that secures it. SmartAsset notes that lenders check your income and existing debts before approving a HELOC.
3. Close and draw. Funds come to you as cash you control. On the network programs described below, at least 75% of the line is drawn at closing, so this works as a funding tool and not as an unused standby line.
4. Document the money. Keep the HELOC agreement, the draw record, and the bank statements showing where the cash went.
5. Apply for the purchase loan. This is a separate file with its own lender. That lender decides whether borrowed funds count as acceptable down-payment money.
6. Carry three obligations. You now owe the first mortgage, the line payment, and the second-property payment.
A CFPB overview of HELOCs describes the draw period, the repayment period that often runs 10 or 20 years, and the core risk. If you fall behind, you could lose the home that secures the line. In this plan, that home is your primary residence.
What the Network’s HELOC Programs Look Like
Lendmire places standalone lines through two wholesale programs. Each applies only within its own terms. The first is a higher-leverage program with a 3-year interest-only draw and a 17-year fully amortizing repayment. The second is a longer-runway program with a 5-year interest-only draw and a 25-year repayment.
| Feature | Higher-leverage program | Longer-runway program |
|---|---|---|
| Draw / repayment | 3 years / 17 years | 5 years / 25 years |
| Combined exposure cap | $2,000,000 | $750,000 |
| Line above $500,000 | 700+ credit | 720+ credit |
The line itself runs from $25,000 to $750,000, with a lower floor in Michigan. A line above $500,000 is for primary residences only. It caps at 75% CLTV and requires a full appraisal. Lines at or below $500,000 ordinarily use an automated valuation, though a higher CLTV may require a second valuation.
Both programs price the line on a floating basis through the draw and the repayment period. The line never converts to a fixed payment. That matters when you stress-test the budget later.
Second-home line limits by credit tier
If the line is secured by a second home, these tiers apply, up to $500,000.
| Credit profile | Max CLTV on a second-home line |
|---|---|
| 720+ | 90% |
| 680 to 719 | 85% |
| 660 to 679 | 80% |
| 640 to 659 | 75% |
On a second-home line, 640 is the minimum credit. The 90% ceiling exists only at 720 or better, so never read it as the general limit.
For a line on a primary residence, the ceiling also reaches 90% CLTV at a 720 or better profile. The program floor for credit is 600. A primary residence in a state that treats it as a homestead can cap lower. For example, a Texas primary residence caps at 80% combined loan-to-value.
If the line is secured by an investment property, the ceiling is 70% CLTV, with no tier above it. The minimum credit profile there is 700, and the line runs only the 5-year draw and 25-year repayment structure.
Most of these ranges are guidelines from select wholesale lenders. Every file is reviewed individually and nothing here is a commitment to lend.
A Provider Checklist You Can Use on Any Lender
Ask every provider these questions before you apply. They separate a line that works for this plan from one that does not.
- Permitted use. Does the agreement allow funds toward buying another property? Some providers restrict use for investment purposes.
- Rental restrictions. Does the agreement bar renting out the home that secures the line? That matters if the secured property is, or will become, a rental.
- Draw rules. Is there a minimum first draw or a minimum on later draws? On the network programs, the minimum subsequent draw after closing is generally $1,000, except $4,000 in Texas on the longer-runway program.
- Index and margin. The payment is variable, so ask how it is set and what happens in the repayment period.
- Valuation and closing costs. Ask whether an appraisal is required and what the fees are.
- Freeze rights. Can the lender reduce or freeze the line if your home’s value declines? Do not count on undrawn availability.
- Title and vesting. Who must hold title? On the network programs, the individual borrower or a revocable living trust. LLCs, corporations, and partnerships cannot hold title.
Where the General Rule Breaks
A HELOC can work as a down-payment source, but several edge cases catch buyers by surprise.
The provider bars the use. Some line agreements limit what you can spend the money on. Read the permitted-use language before you apply, not after.
The purchase lender will not accept the funds. Each lender sets its own rules on borrowed down-payment money. Some want the funds documented for a period before the application. Ask the second-home or rental lender first, and the HELOC lender second.
The property is already in an LLC. A line cannot be written to an entity. A property already deeded to an LLC needs a vesting change first, or a DSCR cash-out refinance instead. Any LLC-titled DSCR loan is subject to lender program eligibility.
The property type is not eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not offered on either HELOC program. Single-family, 2-4 unit, PUD, townhome, and condominium properties are eligible, including non-warrantable condos.
You own many financed properties. A borrower can hold at most three lines. A borrower with more than 15 financed properties is not eligible.
A listing is active. In several states, including IN, NC, PA, TN, TX, and WA, a property listed for sale, or listed within the past 60 days, is ineligible.
Your state is outside the footprint. Lendmire places HELOCs in 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than its 41-market DSCR footprint, which includes Washington, D.C.
The credit history has a derogatory event. A bankruptcy needs 4 years of seasoning on both programs. Foreclosure history splits by program on primary residences and second homes. One program accepts a foreclosure after 7 years and a short sale or deed-in-lieu after 4, and the other declines the history regardless of age.
How the HELOC Affects the Second-Home Loan
The type of purchase loan decides how much the HELOC hurts.
On a loan underwritten to your personal income, the HELOC payment counts against you in DTI. Network HELOC programs cap DTI at 50%. They use 45% for credit profiles from 600 to 679, and a ratio above 45% needs a 680 minimum. The line is also qualified on the interest-only payment calculated on the maximum draw, not on what you actually borrow.
A DSCR purchase loan works differently. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. It does not run a personal DTI test, so the HELOC payment is not counted in a ratio. Source-of-funds documentation still applies. The lender still wants to see where the down payment came from.
Investors often choose a HELOC for the down payment and a DSCR loan for the purchase when high DTI blocks conventional financing. For the DSCR side of that pairing, here are the typical ranges across the wholesale network, subject to lender guidelines:
- Purchase leverage usually lands at 75% to 80% LTV, which means 20% to 25% down. Select programs reach 85% LTV with roughly a 700 or better score.
- Coverage of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
- Credit floors vary. A 620 floor exists in parts of the network, most programs want around 660, and 700 or better unlocks the strongest leverage tiers.
- Reserves commonly run around 6 months of PITIA, and they vary by lender, leverage, loan size, and transaction type.
- Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders).
Your complete DSCR loans guide covers these ranges in detail. A larger down payment can lift coverage, but it never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
One caution on the word cash flow. Clearing 1.00 means rent covers PITIA. It does not mean the property produces profit, because repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.
The Three-Payment Stress Test
Before you draw, add up the three obligations and ask what happens when each one moves.
Picture an investor with a primary residence, a floating-rate line, and a rental under contract. The first mortgage is steady. The line payment moves, and the rental has to carry its own payment, not rely on the investor’s paycheck to cover it.
Run these checks:
- Does the rental cover its own payment at the DSCR you are targeting? A coverage ratio around 1.2x leaves more room than one sitting at 1.00.
- What if the line payment rises? The line floats and never converts to fixed. Test your budget with a meaningfully higher payment.
- What if the rental sits vacant for a period? Your paycheck covers the rental’s payment and the line at the same time.
- What if the primary home’s value dips? A lender can reduce or freeze a line when value declines, so do not plan on undrawn availability.
- What if you sell the primary? Selling the home generally requires paying the line off in full.
If any answer breaks the budget, reduce the draw or look at another structure. Funding most of a purchase with borrowed money means you hold little equity in the new property, which raises the risk if values fall.
HELOC, Cash-Out Refinance, or DSCR Cash-Out?
The same equity can be reached several ways. Each one fits a different situation.
| Option | What it does | Best fit |
|---|---|---|
| HELOC on primary | Adds a second lien and keeps the first mortgage | You like the first mortgage as it is |
| Cash-out refinance on a rental | Replaces the loan on the property you tap | You own a rental with built-up equity |
| DSCR cash-out refinance | Replaces the loan on a rental and qualifies on the property’s rental income | You want to tap a rental, or a property already deeded to an LLC |
On a standard rental, a DSCR cash-out refinance tops out around 75% LTV across most of the network. About 6 months of seasoning is the common expectation. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
A HELOC secured by the primary puts your home on the line for the investment. A cash-out on a rental puts the rental on the line. That difference is often the whole decision.
This plan tends to suit an investor with these traits:
- Meaningful equity in a primary home and a credit profile in the higher tiers.
- A second property whose rent covers its own payment with room to spare.
- A budget that survives a higher line payment and a vacancy.
- A purchase lender confirmed in writing to accept borrowed funds.
It tends to be a poor fit when:
- The rental only just covers its payment, and you are counting on your paycheck to fill the gap.
- You plan to fund nearly the entire price with the line.
- The title sits in an LLC, or the property type is on the ineligible list.
- You live outside the 16 states where Lendmire places these lines.
Tax treatment can depend on how the funds are used and how the property is held. You should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Can I use a HELOC for the down payment on a second home?
Usually, yes, if the line agreement permits it and the purchase lender accepts borrowed funds. The line pays for the down payment, closing costs, or more. It does not replace the purchase loan, which has its own leverage, credit, and property rules.
What CLTV can I expect on a second-home line?
On a second-home line, the network ceiling is 90% CLTV, and only at a 720 or better credit profile. A 700 or 680 score tops out at 85%, 660 at 80%, and 640 at 75%. These figures describe lines up to $500,000, subject to lender guidelines.
Does the HELOC payment count against me on a DSCR purchase?
A DSCR purchase loan does not run a personal DTI test, so the HELOC payment is not counted in a ratio. The lender still reviews your source of funds. A DTI-based purchase loan does count the HELOC payment, so the two loan types respond differently.
Can I put the line on an investment property instead?
Yes, but the terms are tighter. On an investment-property line, the ceiling is 70% CLTV, the minimum credit profile is 700, and only the 5-year draw and 25-year repayment structure is offered.
Can an LLC hold the line?
No. Title has to sit with the individual borrower or a revocable living trust. A property already in an LLC needs a vesting change, or a DSCR cash-out refinance can reach the equity instead.
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. The brokerage shops its wholesale lenders to find the program that fits your file, and it can then arrange the DSCR purchase loan behind it. An illustrative calculator on this site gives a rough estimate. It does not stand in for a full review.
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.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 – What You Should Know About Home Equity Lines of Credit (booklet)
2. SmartAsset – Using a HELOC for a down payment
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: Where to Get a DSCR HELOC on a Short-Term Vacation Rental · DSCR Cash-Out Refinance When a VA Loan Home Has Become a Rental: The 2026 Guide · Where to Get a HELOC to Buy a Home Before Selling the Current One
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.