The Quick Read: It depends on the contract, but usually new borrowing stops and the line moves into a repayment phase, where you pay principal plus interest. Some lines in the wider market instead demand the full balance in one lump sum. “Bank statement” only describes how your income was documented at approval, so it changes nothing about this moment.
- Access to unused credit ends on the last day of the draw. The balance carries forward unchanged.
- On investment-property lines in Lendmire’s wholesale network, a 5-year interest-only draw is followed by a 25-year fully amortizing repayment.
- Pricing on those lines floats through both phases and never converts to fixed.
- You have four exits: pay the balance down, refinance it, renew it, or let the line run through its amortizing repayment.
Key Terms Defined
Bank statement HELOC: A home equity line of credit where the lender reads your deposit history instead of tax returns. It is reviewed on documented income under the applicable program, subject to lender guidelines.
Draw period: The stretch when you can borrow against the line, usually paying interest only.
Repayment period: The phase after the draw, when borrowing stops and principal comes due.
Amortization: A payment schedule that pays down principal and interest together until the balance reaches zero.
Balloon payment: The entire remaining balance due at once on a set date.
CLTV: Combined loan-to-value. Your first mortgage plus the line, divided by the property’s value.
DSCR: Debt service coverage ratio. A rental’s monthly rent divided by its monthly principal, interest, taxes, insurance, and HOA dues.
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 Happens to Your Bank Statement HELOC on the Last Day of the Draw?
The line closes to new borrowing. Whatever you didn’t use is gone. Whatever you owe stays exactly as it was and rolls into the next phase.
Picture an investor who drew most of the line to cover a down payment on a rental. They paid interest only for five years. On the last day of the draw, the balance is the same as the day they borrowed it. Nothing was chipped away.
That is the part people miss. Interest-only means the payment never touched principal. The repayment phase is where principal finally shows up.
Experian explains that some HELOCs carry a balloon, and that an amortizing repayment period more commonly runs 20 years. That is a market-wide pattern. The network figure for investment-property lines is a 25-year amortizing repayment after a 5-year draw.
Draw Versus Repayment: What Actually Changes
| Factor | Draw period | Repayment period |
|---|---|---|
| New borrowing | Allowed | Stops |
| Payment type | Interest only | Principal plus interest |
| Unused credit | Available | Gone |
| Pricing | Floats | Floats, never converts to fixed |
| Balance | Whatever you drew | Same balance, now amortizing |
The payment row is where most of the pain sits. Once the schedule begins paying down principal, the payment rises, often by a lot. A bigger balance and a shorter remaining term both widen the jump.
Floating pricing adds a second moving part. If the index has climbed since you opened the line, the first amortizing payment reflects that too. Plan for both effects at once.
The Fork: Amortizing Versus Balloon
This is the main fork in the road, and your signed note decides it. Some articles claim every HELOC amortizes at the end. That is wrong.
The CFPB’s HELOC booklet says the lender may set a schedule that repays the balance over a set number of years. It also says you may have to pay the entire balance at once. If that happens, the booklet says you need a plan to refinance with that lender, borrow from another lender, or find some other means. It warns that failing to pay a balloon in full can cost you the property.
On investment-property lines in Lendmire’s network, the structure is fully amortizing rather than a balloon. Still, read your own note. It names the draw end date, the repayment term, and whether any balloon, renewal, or conversion language exists.
Three questions belong on your checklist:
- Does a balloon apply at the end of the draw?
- Is renewal offered, and does it require a new application?
- Can the lender refinance the balance itself?
Can You Keep Drawing After the Date?
No. The FTC states that you can’t borrow more during repayment. You must repay either the whole balance or make payments over time. The FTC adds that borrowers may need a new loan to pay off a balloon.
Two more details are worth knowing:
- Zero balance: Paying the line to zero near the end of the draw doesn’t extend your access. When the date passes, the line is over.
- Early freeze: The CFPB booklet notes a lender may freeze or reduce a line under defined conditions, such as a drop in property value. In practice, your draw can end before the calendar says it will.
What the Bank Statement Part Changes (and Doesn’t)
It changes the front door. Your deposits were read at approval in place of tax returns. That’s all.
It does not change the back end. Nobody re-reads your statements when the draw ends. The payment steps up on schedule regardless of how your deposits look today.
There is one wrinkle. On this network, the line is qualified on the interest-only payment calculated on the maximum draw. The amortizing payment is a different and larger number. A line that qualified comfortably can feel tight later.
So run your own test. Model the rental’s cash flow against the fully amortizing payment before you lean on the line. Don’t wait for the date to learn the answer.
Where This Line Fits and Where It Doesn’t
Structure matters here, because investors often assume a line behaves like their DSCR loan. It doesn’t. Across the wholesale network, the main differences look like this:
| Factor | Investment-property line | DSCR cash-out refinance |
|---|---|---|
| Max leverage | 70% CLTV | Around 75% LTV on standard rentals |
| Title | Individual or revocable trust | LLC allowed, per program rules |
| Reviewed on | Documented personal income | Property rent versus PITIA |
| Payment path | Floating, then amortizing | Typically 30-year fixed spine |
On an investment property, the line caps at 70% CLTV, requires a minimum 700 credit score, and runs up to $500,000. Primary residences and second homes have more room, including two draw structures: a 3-year draw with a 17-year repayment, and a 5-year draw with a 25-year repayment. Investment lines use the 5/25 structure only. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Because investors often draw heavily at closing, the balance heading into repayment is rarely small. The end-of-draw payment is rarely a rounding error either.
HELOC availability is narrower than the DSCR footprint. Lendmire arranges lines in 16 full-service states, while its DSCR investor programs run across 41 markets, including Washington, D.C. Every figure above is subject to lender guidelines and full file review.
Your Exit Routes
You have four. Which one fits depends on the balance, the property, and what your credit and income look like now.
Pay it down. Any principal you retire before the date shrinks the amortizing payment. A partial paydown can also make a refinance easier to qualify for.
Refinance the balance. A new lender reads the file again, with fresh documentation. This is the path where bank statement borrowers need current deposits in good shape.
Renew. Only if your lender offers it. Treat it as a new application, not an entitlement.
Let it amortize. Fine when the rental carries the higher payment. Painful when it doesn’t.
The DSCR Cash-Out Exit
For a rental, the cleanest exit is often a DSCR cash-out refinance that pays off the line. 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.
Here the file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal deposits matter far less, though the lease, appraisal and reserves still have to be documented. That makes it a strong replacement for a line whose income documentation you no longer want to lean on.
The points below describe DSCR cash-out loans only. They do not describe the home equity line, which needs a minimum 700 credit score on an investment property. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
- Cash-out tops out around 75% LTV on standard rentals, and 70% on short-term-rental collateral.
- About 6 months of seasoning is the common expectation.
- Most DSCR programs want a credit score around 660, though a 620 floor exists in parts of the network. A 700+ score opens the strongest leverage tiers.
- Reserves vary by lender, leverage, loan size, and transaction type. Around 6 months of PITIA is common, and loans above $1,500,000 typically step up toward 9 months.
- 1.00 is where many select programs start on coverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Entity rules matter at this step. The home equity line must sit in an individual’s name or a revocable trust. If the rental is already deeded to an LLC, you need a vesting change or a DSCR cash-out instead. On the DSCR side, LLC-titled loans are available subject to lender program eligibility.
One honest limit: clearing 1.00 on coverage is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex all sit outside the calculation.
The Decision Table
| Your situation | Likely best exit | What you’ll need |
|---|---|---|
| Rent covers a new payment comfortably | DSCR cash-out refinance | Lease, appraisal, reserves |
| Balance is small, cash on hand | Pay it off | Nothing new |
| Income and credit stronger than at approval | Refinance or renew | Fresh deposit history |
| Rent is thin against the new payment | Partial paydown, then reassess | Coverage worked up first |
| Property in an LLC | DSCR cash-out | Program-eligible entity file |
Say the rent falls below 1.00 against the new debt. That doesn’t end the conversation. Select lenders in the network offer sub-1.00 programs, with leverage and terms adjusted. Qualification stays subject to credit approval and property review.
Suppose instead the numbers work, but barely. That’s a risk worth sizing, because a floating-price line can move the target before you reach the finish.
A Countdown That Works
Twelve months out. Find the end date in your note. Pull your current balance. Compare the fully amortizing payment against the rental’s cash flow.
Six months out. Start documenting. Keep deposits clean, since a refinance reads them again. Pull your credit and look for surprises. A DSCR cash-out generally expects around six months of seasoning on the property, so check the timing.
Three months out. Decide your exit. If it’s a refinance, start the application. If it’s a paydown, set aside the cash.
End date. Confirm what the lender does on the last day. Confirm where payments go next.
Lendmire’s team brokers across many wholesale lenders, so the work is matching your property, equity, credit profile, and combined leverage to the program that fits. For a related read on payment mechanics, see Lendmire’s piece on how a bank statement HELOC payment shifts when the draw period ends. For the balloon case specifically, read when a bank statement HELOC makes sense if the draw ends with a balloon payment.
If you want to see how a DSCR exit works in full, the complete DSCR loans guide walks through it.
Frequently Asked Questions
Does my payment go up when the draw ends?
Almost always. Interest-only payments become principal-plus-interest payments, and the schedule is built to retire the whole balance. Floating pricing can add a second increase if the index has risen. Model the amortizing payment against rent well before the date.
Is a balloon payment possible?
Yes, on some lines in the wider market. Experian and the CFPB both describe it. Investment-property lines in Lendmire’s network amortize instead, but your signed note is what governs. Read it before assuming either way.
Can I convert the balance to a fixed rate?
Not on this network. Pricing floats through both phases and never converts to fixed. A closed-end fixed second is a separate product. A DSCR cash-out refinance is the more common route to fixed terms on a rental.
What if I can’t qualify for a replacement?
You have options short of default. A partial paydown can shrink the balance and improve the numbers. Selling the property or letting the line amortize may also work if the rent supports it. Contact your lender early, and ask whether any extension or renewal path exists.
Does the open line affect my next purchase?
Yes. The line’s balance and payment count in your debt picture and in combined leverage on the property. DSCR files focus on property rent against its payment, but lenders still review your full debt and reserves.
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. Whichever path you pick, the end of the draw is a date you can set your calendar by, so use that to your advantage.
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. Experian – What Is a Draw Period on a HELOC
2. CFPB – What you should know about HELOCs
3. FTC – Home Equity Loans and Home Equity Lines of Credit
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: What Happens If You Put Bank Statement HELOC Money Into a Syndication? · Can You Get a Bank Statement HELOC in Texas Without Refinancing? · Where to Get a Bank Statement HELOC When Learning How the Draw Period Works
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
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.