Top Investment Property HELOC Providers for a Rental Property With a PACE Assessment

The Quick Read: No ranked list of providers can tell you who will write a line on a rental that carries a PACE assessment, because the lien on the property decides the answer, not the provider’s brand. A PACE assessment is a tax-bill obligation that usually sits ahead of the mortgage and ahead of any new line, though the title report confirms where yours actually falls. Many lenders will ask for it to be paid off and released before they take a position behind it. The best provider for your situation depends on your equity, credit, title and how the assessment is handled.

• On Lendmire’s wholesale network, an investment-property line reaches 70% CLTV at a 700 or better credit profile, up to $500,000.
• A PACE balance left in place eats into that 70%, and the payoff usually comes from your cash or your line.
• A partial paydown does not remove the priority lien. A full payoff and a recorded release do.
• Investment lines must be titled to an individual or a revocable living trust, not an LLC.
• A DSCR cash-out refinance can retire the assessment in the same transaction, so it belongs in the comparison.

Why PACE Changes the Answer on a Rental

PACE stands for Property Assessed Clean Energy. It is financing for home improvements, often solar, HVAC or windows, that gets repaid through an assessment on the property tax bill. The loan attaches to the property, not to you.

That one fact explains why lenders treat it differently from a car loan or a credit card. Repayment is secured by a property tax lien that takes priority over existing and future mortgages, according to Mayer Brown’s analysis. A home equity line is a second mortgage in most cases. It would sit behind the first mortgage and behind the assessment.

Lenders see this as a collateral problem more than a payment problem. If the property were ever sold at foreclosure, the assessment gets paid before the new line does. So the lender either wants the claim gone or wants the line sized as if the claim were still there.

Investment-property equity lines were already a thin product. Many depository institutions skip non-owner-occupied collateral altogether. A PACE assessment narrows the field further, which is why a single bank’s answer tells you little about the whole market.

Key Terms Defined

PACE assessment: a repayment obligation for property improvements that is collected through the property tax bill and tied to the property rather than the owner.

CLTV (combined loan-to-value): all the loans against the property, added together, divided by the property’s value.

Lien priority: the order in which claims get paid if the property is sold to satisfy debt. First in line gets paid first.

Super-lien: a nickname for a lien that jumps ahead of a first mortgage. A PACE assessment is the usual example.

Payoff letter and release: the payoff letter states the exact amount needed to clear the assessment. The release is the recorded document showing it is gone.

Automated valuation: a software estimate of value that stands in for a full appraisal on smaller lines.

How Underwriting Treats a PACE Assessment, Step by Step

Step 1: Find it. PACE shows up in tax records and appears as its own line on the tax bill. It is easy to miss if you only read mortgage statements. A title search and a tax-bill review bring it out, and a lender will run both.

Step 2: Rank the liens. Property taxes and the PACE assessment come first. The first mortgage comes next. The new line comes third. The lender prices the risk of that third position.

Step 3: Size the new line. Standard investor-line math applies. The lender adds every lien, divides by value, and compares the result to its CLTV ceiling. Any PACE balance that stays on the property uses up room under that ceiling.

Step 4: Pay off and release. The usual lender path is to pay the assessment in full before the new line is placed and to record the release. The payoff figure and the recorded satisfaction come from the PACE administrator, not the county tax office. A partial payoff leaves the priority lien in place. A payoff does not create equity. It removes a claim that sits ahead of the new lien.

Step 5: Re-run the numbers. After the release, the lender recalculates CLTV and moves on to credit, debt-to-income, title vesting and property type. A standard equity line does not qualify off the property’s rent the way a DSCR loan does. Your own income and debts carry the file.

What Does PACE Do to Your Usable Equity?

It cuts it dollar for dollar, because the assessment counts as a lien ahead of the new line. Here is a modeled example. These are assumptions for illustration, not market data.

Say a rental is worth 100 units. The first mortgage is 50% of value. A PACE balance is 8% of value. The investment-line ceiling on the network is 70% CLTV.

• No PACE on the property: 70% ceiling minus 50% first mortgage leaves room for a line up to 20% of value.
• PACE left in place: 50% plus 8% already uses 58%, so room drops to 12% of value.
• PACE paid off with your cash first: room returns to 20% of value, but you spent 8% of value in cash to get there.
• PACE paid off from the new line: the line draws the payoff amount first, so usable cash from the line is the 20% room minus that 8%.

The takeaway is that every route costs you the same 8%. The only question is whether it comes out of your pocket or out of the line.

Two other limits can bind before the CLTV does. An investment line on the network tops out at $500,000, so on a high-value property the dollar cap can bind first. At least 75% of the line is drawn at closing on the network’s programs, so you are not holding a large undrawn balance. An illustrative calculator can estimate how the CLTV math shifts, but it is an estimate only.

PACE lenders’ caution has a data basis. CFPB research, as summarized by Mayer Brown, found that PACE substantially raised property tax bills for the homes it touched. It also found PACE borrowers were more likely to fall behind on a first mortgage. A lender reading that pattern has a reason to want the assessment cleared.

How to Judge Providers When Ranking Depends on Your File

An honest answer to the top-providers question is a method, not a list. The lenders that write these lines depend on your property type, equity, credit profile and title. A broker that shops several wholesale lenders can match the file to the program. Lendmire is a broker, not a lender, and it places these lines through select wholesale partners. A line placed on a rental is subject to lender guidelines and full file review.

Use this scorecard with any provider you talk to.

• Does it lend on non-owner-occupied collateral at all? Many depositories do not.
• What is the investment CLTV ceiling? On the network it is 70% on an investment property. Credit at 720 and credit at 700 both reach that same 70%, so a higher score buys eligibility rather than extra leverage.
• What is the credit floor? On the network an investment line starts at 700.
• How does it handle a PACE assessment? Ask whether it requires a full payoff and a recorded release before it takes a lien position.
• Who can hold title? On the network it is an individual or a revocable living trust. An LLC cannot hold title.
• What does the structure look like? The network’s investment lines run a 5-year interest-only draw followed by a 25-year repayment period. Pricing floats during both periods and does not convert to fixed.
• How is value set? Because an investment line caps at $500,000, it normally uses an automated valuation, with a traditional appraisal only on request or when higher leverage calls for a second look.
• What limits apply to your portfolio? A borrower is limited to three lines, and an owner of more than 15 financed properties is not eligible.

Most borrowers also ask about the wider market. NerdWallet reports that investment-property HELOCs typically need a credit score of 720 or higher and at least 20% equity. That describes the broader market. On Lendmire’s network, an investment line reaches 70% CLTV at 700 or better, with debt-to-income capped at 50%. These lines are offered only in the 16 states where Lendmire provides full-service lending: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA.

Eligible property types include single-family homes, 2-4 unit buildings, PUDs, townhomes and condominiums, including non-warrantable condos. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agriculturally zoned properties are not offered.

Where the General Rule Breaks

Some assessments are not first in line. A small number of states have changed priority by statute, and some PACE programs are written as junior liens. So the title report, not the headline rule, decides where your assessment actually sits.

Commercial PACE follows different rules. The federal rule on PACE covers residential assessments only, according to Husch Blackwell. Commercial PACE is governed by state and local law. A larger or commercially classified rental may carry a commercial assessment that the residential rule never touches. Commercial and mixed-use collateral is not offered on the network’s equity lines in any case.

The federal rule did not fix priority. It adds ability-to-repay and disclosure requirements for the PACE lender at origination. The MBA and NCLC joint statement says it leaves the super-lien priority untouched. The same rule does not govern a later HELOC lender. That lender’s guidelines are its own. Husch Blackwell also notes that existing PACE payments count as property taxes in the definition used for ability-to-repay, so a lender may weigh them as a tax-level obligation.

Solar loans are not all the same thing. A recorded solar deed of trust is a true junior mortgage in the land records. A PACE assessment is a tax item. A fixture filing on the panels is a third case. Each shows up in a different place in the title work, so ask which one you actually have.

Delinquency changes the conversation. An unpaid assessment is collected like a tax lien. Whether a lender requires taxes to be current before it considers the file is a program question to ask up front.

Selling or buying a rental with PACE works differently. The assessment stays with the property. A buyer’s lender may be reluctant to take on a remaining PACE obligation, so a seller may need to clear it at sale. If you are buying a rental that already carries one, expect the lender to want to see it paid or addressed in the transaction.

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

HELOC, Cash-Out Refinance or DSCR Cash-Out When PACE Is Present?

All three can work, and each handles the assessment differently.

A DSCR cash-out refinance can retire the PACE balance inside the same transaction. DSCR means debt service coverage ratio, which compares the monthly rent to the full monthly obligation, meaning principal, interest, taxes, insurance and any HOA dues. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.

Here are the network ranges for that route. Cash-out tops out around 75% LTV on a standard rental and 70% on short-term-rental collateral. About 6 months of seasoning is the common expectation. Credit floors start at 620 in parts of the network, most programs want around 660, and 700 or better unlocks the strongest leverage. Standard loan sizes reach up to $3,000,000 on standard programs, with smaller balances available through select lenders. The 1.00 coverage level is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Properties vested in an LLC can work on this route, subject to program terms.

Clearing 1.00 does not mean the property produces positive cash flow. Repairs, vacancy, management, utilities and capital expenses sit outside the calculation. If an assessment stays on the tax bill, it also raises the taxes line the coverage test uses.

A refinance replaces your existing mortgage, so it only makes sense if the new terms beat what you hold now. For the program basics behind the DSCR route, see the complete DSCR loans guide.

The decision usually turns on three questions. First, how much equity remains after the assessment is paid? Second, does your property sit in an LLC? Third, would you rather keep your current first mortgage or replace it? A property already deeded to an LLC needs a vesting change before an equity line, or a DSCR cash-out instead.

Documents to Gather Before You Call

• The most recent property tax bill, with the PACE line highlighted.
• A payoff letter from the PACE administrator, not just a balance from the county.
• A title report or title commitment showing every recorded lien.
• Current mortgage statement for the first lien.
• The lease and rent history for the rental.
• Credit authorization and recent proof of income and debts.
• Current deed or trust documents, so vesting is clear from the start.

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. Reach the team at 828-256-2183 or request a quote. Programs change, and every file is underwritten individually by the lender.

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. mayerbrown.com

2. NerdWallet – HELOC on an Investment Property

3. Husch Blackwell

4. NCLC/MBA – Final PACE Rule Will Protect Homeowners, Improve Mortgage Performance