Where to Get a HELOC With a 10-Year Interest-Only Draw Period

The Quick Read: A 10-year draw is common on bank and credit union lines, but it is a product choice, not a rule, and rental-property lines are usually shorter. The network Lendmire brokers through offers two draw structures on primary residences and second homes, and one structure on investment properties.

• Primary residences and second homes: a 3-year draw with 17-year repayment, or a 5-year draw with 25-year repayment.
• Investment properties: the 5-year draw with 25-year repayment only, capped at 70% CLTV and a $500,000 line.
• The investment minimum credit score is 700; primary residences start at 600 and second homes at 640.
• LLC-titled rentals cannot hold this line. Title must sit with an individual or a revocable living trust.
• At least 75% of the line is drawn at closing, so it works less like a bank card and more like a funded second loan.

This product is available only in Lendmire’s 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA.

What Is a 10-Year Interest-Only Draw?

A HELOC is an open-end line of credit secured by home equity. The CFPB describes the borrowing window as the draw period and says it “could last 10 years, for example.” That wording is an illustration. The CFPB’s guide to using home equity says the draw period is usually ten years, with interest payments during the draw and interest plus principal afterward.

So the pattern is simple. You borrow during the draw and pay interest on what you owe. When the draw ends, the line stops and payments amortize the balance. The balance does not shrink in the draw unless you pay extra principal.

Length varies by lender. Experian says most lines carry a 10-year draw, but some lenders offer 15- or 20-year draws, and some lines end in a balloon payment. A 10-year draw is common. Never assume it.

Key Terms Defined

Draw period: the window when you can borrow against the line and pay interest on the balance.

Repayment period: the phase after the draw when payments include principal and the line is closed to new borrowing.

CLTV: combined loan-to-value, which adds the new line to existing liens and divides by property value.

Balloon payment: a lump sum for the whole balance, due when the draw ends.

Vesting: the legal name on the deed, which decides whether a borrower can use this line at all.

Where Do You Actually Find One?

Four lender types write these lines, and each has trade-offs.

That is why a rental owner who wants a 10-year draw often finds none. Experian says investment-property lines generally require a higher credit score, lower debt-to-income and stronger cash reserves than a primary-residence line, in its explainer on lines against rentals.

A broker sees many lenders’ sheets at once. Across Lendmire’s wholesale network, no line on a rental runs a 10-year draw. The investment structure is a 5-year interest-only draw followed by a 25-year fully amortizing repayment. On a primary residence, the network offers a 3-year or 5-year draw. If a 10-year draw is the hard requirement, confirm it in a lender’s written disclosure, and expect it mainly on owner-occupied lines.

How Underwriting Treats the Line, Step by Step

1. Occupancy and property. The file starts with what the home is. The line is a standalone first or second lien on single-family, 2-4 unit, PUD, townhome or condominium, including non-warrantable condos. Manufactured homes, co-ops, condotels and log homes are not offered. Rural or agricultural zoning, mixed-use and commercial properties are not offered either.

2. Vesting. Title must sit with the individual borrower or an inter vivos revocable living trust. LLCs, corporations, partnerships and irrevocable, blind or land trusts cannot hold title. A rental already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead. Retitling can carry legal, insurance and tax consequences, so involve an attorney and a tax professional first.

3. Credit. The score floor is 600 on the program overall. Second homes start at 640 and investment properties at 700. The score comes from a single-bureau model keyed to the primary wage earner. The report must be no more than 90 days old at closing, and rescores are not allowed.

4. Debt-to-income. DTI tops out at 50%, and at 45% for scores from 600 to 679. A ratio above 45% needs at least a 680. The line is qualified on the interest-only payment calculated on the maximum draw, not on the amount first drawn.

5. Valuation. Lines at or below $500,000 ordinarily run an automated valuation, though a higher CLTV may call for a secondary valuation. A full appraisal is required on every line above $500,000, and a borrower may ask for one in any case.

6. Sizing. Combined leverage counts the full line limit, not just the draw. The ceiling depends on occupancy and score.

What CLTV Ceilings Look Like by Occupancy

CLTV caps are tiered by occupancy and credit, and they differ sharply.

The 90% ceiling exists only for a 720 or better credit profile. On an investment property, 70% is the ceiling, with no tier above it. Higher figures that appear for equity lines elsewhere describe the broader market, and on this network the investment figure is 70%. Treat every figure as subject to lender guidelines and full file review.

A line above $500,000 is for primary residences only. It needs a 700 credit profile or better (720 on the 5-year draw structure), caps at 75% CLTV and requires a full appraisal.

The Fixed Features That Surprise Borrowers

The 75% draw at closing is the one that changes how the line behaves. A bank line lets you open the account and borrow nothing. Here, at least 75% of the line is drawn when the loan closes. After closing, the minimum subsequent draw is $1,000 on the 5-year structure, except Texas at $4,000. The 3-year structure does not state a subsequent-draw minimum.

Pricing floats across both the draw and the repayment period and does not convert to a fixed rate. A borrower cannot lock a portion of the balance. Both structures qualify on the interest-only payment, but the payment steps up when repayment begins.

Where the Rule Breaks

Texas. On a primary residence, Texas applies a 12-day waiting period, a one-lien-at-a-time rule and 12-month seasoning, and it caps combined leverage at 80%. Texas second homes and investment properties are eligible as non-homestead transactions. Texas properties are limited to 10 acres. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.

Tennessee. Draw structures run shorter: 3-year draw with 12-year repayment, or 5-year draw with 10-year repayment.

New Mexico and Ohio. The CLTV cap depends on the credit profile.

Listed properties. A property listed for sale, or listed within the past 60 days, is ineligible in NC, PA, TN, TX and WA.

Derogatory history. A bankruptcy needs 4 years of seasoning from discharge or dismissal. On primary residences and second homes, one wholesale program seasons a foreclosure at 7 years and a deed-in-lieu, short sale or pre-foreclosure at 4. The other declines that history entirely. Investment files follow the 7-and-4-year path.

Exposure. A borrower may hold three lines. Combined exposure is capped at $2,000,000 on the 3-year draw program and $750,000 on the 5-year program, so the cap, not the three-line limit, sets the practical total. Borrowers owning more than 15 financed properties are not eligible.

HELOC or DSCR Cash-Out?

A HELOC leaves the first mortgage in place and adds a second lien. A DSCR cash-out replaces the first mortgage. Pick by what you want to keep.

A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. A HELOC here is reviewed on personal credit and DTI. Where a rental sits in an LLC, a DSCR cash-out is usually the practical route because the line cannot be written into an entity. The complete DSCR loans guide covers that structure.

Planning for the End of the Draw

The step-up is the real risk. Experian notes that repayment-phase payments run much higher than draw payments. Payments may change even if you draw nothing more.

Think of a line drawn in full at a 3-year or 5-year interest-only draw. The balance at the end equals the balance at the start. Payments then turn fully amortizing over 17 or 25 years. A plan B matters: a refinance, a sale or extra principal payments that start early. Because pricing floats, the payment can also move with the market during the draw.

Interest-only does not mean cheap. It defers principal. Rental owners should also avoid treating a line as free cash flow. If you later apply for a DSCR loan on the same property, the line payment counts against you.

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.

What Decides the Choice

Run through this checklist before applying.

• Is the property owner-occupied, a second home or a rental?
• Is title in your name or a revocable trust, not an LLC?
• Is your score at the tier you need: 700 for a rental, 640 for a second home, 600 at the floor?
• Does the CLTV ceiling for your occupancy leave enough room after the first lien?
• Can you carry the payment when the draw ends?

If a 10-year draw is non-negotiable, the answer is usually a bank or credit union line on a primary residence, confirmed in writing. If the target is a rental, expect a shorter draw and a 70% CLTV ceiling.

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’s piece Top Bank Statement HELOC Providers With a 10-Year Interest-Only Draw Period covers the self-employed route.

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.

References

1. CFPB

2. CFPB – Using home equity guide

3. Experian

4. Experian – HELOC on investment property