Equity Line on Investment Property | BD Nationwide Mortgage

Equity Line on Investment Property


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John Tappan

Independent real estate and loan broker Maxim Loans 25 years experience as a Broker in San Diego, CA Dre #01022216MLS #394171

In 2025, real estate investors are increasingly turning to Home Equity Lines of Credit to unlock the value of their investment properties. Whether you’re looking to fund renovations, consolidate credit card debt, or expand your portfolio, HELOCs offer flexible access to capital. But unlike owner-occupied homes, tapping equity from investment properties requires navigating a more complex landscape of loan programs, documentation requirements, and lender criteria.

How to Get an Home Equity Line on Investment Property in 2025

This guide explores the top HELOC programs available in 2025—including No-Doc HELOCs, DSCR HELOCs, Bank Statement HELOCs, and Non-QM HELOCs—along with credit score and loan-to-value (LTV) requirements. We’ll also walk through two real-world case studies to illustrate how investors are using these tools to grow their wealth.

How HELOCs for Investment Properties Work

A HELOC is a revolving line of credit secured by the equity in a property. Unlike a traditional loan, you can draw funds as needed during the “draw period” (typically 5–10 years) and repay them over time. For investment properties, HELOCs are structured differently than those for primary residences due to higher risk and stricter underwriting.

HELOC Programs for Investment Properties Available in 2025

1. No-Doc HELOC

No-Doc HELOCs are designed for borrowers who prefer not to disclose traditional income documentation. These programs are ideal for:

  • Self-employed individuals
  • Real estate investors with substantial assets
  • Retirees with non-traditional income

Instead of tax returns or W-2s, lenders may rely on bank statements, asset verification, or property cash flow. Some lenders, like Truss Financial and Griffin Funding, offer no-doc HELOCs with fast approvals and minimal paperwork.

Typical Terms:

  • Loan amounts up to $2 million
  • Minimum credit score: 620–680
  • Max LTV: 70–75%
  • Interest-only payments during draw period

2. DSCR HELOC

Debt Service Coverage Ratio (DSCR) HELOCs qualify borrowers based on the income generated by the property—not personal income. This is a popular option for rental property owners.

DSCR Formula:
DSCR = Gross Rental Income ÷ Total Monthly Debt Payments

Lenders typically require a DSCR of 1.0–1.25, meaning the property must generate enough income to cover its expenses.

Typical Terms:

  • Loan amounts: $100K–$2M+
  • Max LTV: 75–80%
  • Credit score: 680+
  • Draw period: 3–10 years
  • Repayment: 15–25 years

3. Non-Owner Occupied HELOC

These HELOCs are specifically for investment properties or second homes. They’re offered by select credit unions and lenders, such as UNCLE Credit Union and SRI Federal Credit Union.

Typical Terms:

  • Max LTV: 70–75%
  • Credit score: 660+
  • Loan amounts: $10K–$500K
  • Fixed or variable rates
  • Interest-only payments during draw period

4. Bank Statement HELOC

Bank Statement HELOCs are tailored for self-employed borrowers who can’t provide traditional income documentation. Instead, lenders use 12–24 months of bank statements to assess income stability.

Ideal For:

  • Freelancers
  • Gig workers
  • Entrepreneurs

Typical Terms:

Loan amounts: $100K–$750K
Credit score: 680+
Max LTV: 80–85%
Interest-only draw period
Available for primary, second, and investment properties

5. Non-QM HELOC

Non-Qualified Mortgage (Non-QM) HELOCs are for borrowers who don’t meet conventional lending standards. These loans offer flexible underwriting and are ideal for:

High-net-worth individuals
Foreign nationals
Borrowers with recent credit events

Lenders offer HELOCs with no income verification, no employment checks, and no minimum FICO scores for qualified borrowers.

Typical Terms:

  • Loan amounts: $100K–$2M
  • Max LTV: 70–80%
  • Credit score: 620–700+
  • Draw period: 3–10 years
  • Repayment: 15–30 years

 

Investment HELOC Credit Score & LTV Requirements

HELOC TypeMin Credit ScoreMax LTVIncome Verification
No-Doc HELOC620–68070–75%Minimal
DSCR HELOC680+75–80%Property income
Non-Owner Occupied660+70–75%Full or limited
Bank Statement HELOC680+80–85%12–24 mo statements
Non-QM HELOC620+70–80%Flexible

 

Example 1: Scaling a Rental Portfolio with a DSCR HELOC

Investor: Michael, a self-employed landlord in Austin, TX
Property: Duplex valued at $600,000
Mortgage Balance: $300,000
Monthly Rental Income: $4,000
Monthly Debt Payments: $3,200
DSCR: 1.25

Michael wanted to access equity to purchase another rental. He applied for a DSCR HELOC and was approved for a $150,000 line of credit at 75% CLTV. Because his property generated sufficient income, he didn’t need to provide personal income documentation. He used the funds for a down payment on a new property and kept his first mortgage intact.

Example  2: Using a No-Doc HELOC for Business Expansion

Investor: Sarah, a real estate entrepreneur in Miami, FL
Property: Condo valued at $500,000
Mortgage Balance: $250,000
Credit Score: 720
Income: Irregular, from multiple sources

Sarah needed capital to expand her short-term rental business but didn’t want to submit tax returns. She applied for a No-Doc HELOC through Truss Financial. Using 12 months of bank statements and asset documentation, she was approved for a $100,000 HELOC at 70% CLTV. The funds helped her furnish and market her new rental units.

🛠️ Tips for Getting Approved

  • Know your equity: Most lenders require at least 20–30% equity.
  • Check your credit: Aim for a score of 680+ for better rates.
  • Prepare documentation: Even no-doc loans may require bank statements or asset verification.
  • Shop around: Compare lenders offering HELOCs for investment properties.
  • Understand the terms: Look for interest-only draw periods and flexible repayment options.

Why the HELOC is So Vital for Buying Investment Properties in 2025

In 2025, with mortgage rates stabilizing around 6-7% and home equity at record highs, a Home Equity Line of Credit (HELOC) has emerged as a cornerstone tool for real estate investors.archomellc.com Unlike traditional loans, a HELOC allows borrowers to tap into existing home equity as a flexible revolving credit line, making it essential for acquiring investment properties amid rising costs and competitive markets.bankrate.com As property values continue to appreciate—up 5-7% annually in many areas—investors leverage HELOCs to unlock capital without selling assets, fueling portfolio growth.

First, HELOCs provide quick access to funds for down payments or full purchases, bypassing lengthy mortgage approvals.chase.com This speed enhances negotiation power, positioning buyers as cash equivalents in hot markets like those in Texas or Florida, where inventory remains For instance, with average HELOC rates at 8.5-9.5%, they’re often cheaper than credit cards (20%+) or personal loans (10-15%), preserving cash flow for renovations that boost rental yields.

Second, flexibility is key: During the 10-year draw period, interest-only payments minimize short-term burdens, allowing investors to flip properties or hold for appreciation.chase.com This is vital in 2025’s uncertain economy, where variable rates tied to the prime (expected 7-8%) can drop with Fed cuts.cbsnews.com

Third, tax advantages persist through 2025: Interest is deductible if funds improve the property, reducing effective costs by 22-37% for many taxpayers. This incentivizes upgrades that increase property values and rental income.

Moreover, HELOCs enable wealth building by leveraging equity—say, from a $500K rental with 40% equity—to fund another acquisition, compounding returns. Balances rose 27% in Q1 2025, signaling investor confidence.realtor.com

Despite stricter criteria (e.g., 720+ credit, 75% LTV max), HELOCs outperform alternatives like cash-out refinances, which reset primary mortgages. In essence, HELOCs democratize investing, turning homeownership into a launchpad for financial independence—but always consult professionals to mitigate risks like rate hikes or market dips

Final Thoughts on Getting a Home Equity Line on an Investment Property

In 2025, getting an equity line on an investment property is more accessible than ever—thanks to innovative HELOC programs tailored for real estate investors. Whether you’re self-employed, expanding your portfolio, or seeking flexible financing, there’s a solution that fits your needs.

From DSCR HELOCs that rely on rental income to No-Doc and Non-QM HELOCs that bypass traditional underwriting, today’s market offers unprecedented flexibility. Just be sure to understand the credit score and LTV requirements, and work with a lender experienced in investment property financing.