A HELOC on an investment property is available from a smaller pool of lenders than the one serving primary homes, but the options are real: TD Bank, Figure, PenFed Credit Union, Fifth Third Bank, U.S. Bank, Flagstar, Alliant Credit Union, and a range of community and portfolio lenders all write these lines. Qualifying is harder than for a HELOC on your own home. Most lenders cap borrowing at roughly 75% of the property’s value, want a credit score of 700 or higher, and price the rate about 0.5% to 1.5% above what a primary-residence borrower would pay.
Which Lenders Write These Lines
Not every bank or credit union will lend against a rental. The ones that do fall into four groups, and knowing which to approach first saves wasted applications and hard credit pulls.
National and Large Regional Banks
TD Bank lists investment property as an eligible property type for its HELOC alongside primary and second homes.1TD Bank. Home Equity Line of Credit Rates U.S. Bank, Fifth Third Bank, and Flagstar have also been identified as lenders willing to consider non-owner-occupied collateral. Rates at these institutions tend to be competitive because of their capital base, but underwriting is highly standardized. Expect strict credit-score minimums, thorough income documentation, and in some cases a requirement that you already hold deposit accounts with the bank. Availability can also vary by state.
Online and Fintech Lenders
Figure is the most accessible online option. It accepts primary, secondary, and investment properties, offers lines from $15,000 to $750,000, and sets a minimum credit score of 660 for investment properties. Figure won’t lend on co-ops, commercial properties, manufactured homes, or multifamily buildings with five or more units, and it excludes properties held in irrevocable trusts or land trusts.2Figure. Home Equity Line of Credit (HELOC) FAQs The application is faster than a traditional bank’s. The trade-off is less room for personalized underwriting if your situation is complicated.
Credit Unions
PenFed Credit Union and Alliant Credit Union both offer investment property HELOCs. Credit unions often pass cost savings to members through lower fees and slightly better rates. You’ll need to join first, and eligibility depends on where you live, where you work, or which organizations you belong to. Credit unions may also cap line amounts lower than the big banks and limit lending to their geographic footprint.
Community Banks and Portfolio Lenders
Local community banks are often the most reliable source, especially if you invest in a single metro area. Because they keep the loans they originate on their own books rather than selling them to the secondary market, they have room to weigh the whole picture. A strong banking relationship, deep local equity, and consistent rental income can offset a credit score or LTV ratio that a national bank would reject outright.
Portfolio lenders go further. They evaluate your entire real estate portfolio rather than a single collateral property, which suits investors with multiple properties or unconventional income. The flexibility costs more: higher rates, origination fees, and sometimes minimum draw requirements. For borrowers who don’t fit a national bank’s automated approval system, a portfolio lender may be the only realistic path.
What It Takes to Qualify
Investment property HELOCs carry tighter underwriting across the board. The lender is looking at two separate risk profiles: the property’s ability to generate income, and your personal financial health. Both need to clear the bar.
Loan-to-Value Ratio
Most lenders cap the combined loan-to-value (CLTV) ratio at around 75% for investment properties, compared with 85% or 90% for a primary residence. Some go to 80%, more conservative institutions stay at 65% to 70%. The CLTV includes your existing mortgage balance plus the HELOC credit limit, divided by the appraised value. If your rental appraises at $400,000 and you owe $200,000 on the mortgage, a 75% CLTV cap allows total debt of $300,000, leaving room for a $100,000 line.
Credit Score
Most lenders want a FICO score of at least 700, and many prefer 720 or higher. Figure is the outlier at 660 for investment properties.2Figure. Home Equity Line of Credit (HELOC) FAQs A higher score doesn’t just improve your odds of approval; it moves the margin the lender adds on top of the prime rate.
Cash Reserves
Lenders want proof you can cover payments during a vacancy. Fannie Mae’s guidelines require six months of reserves for investment property transactions, calculated as six months of principal, interest, taxes, insurance, and association dues. If you own additional financed properties beyond the subject property and your primary home, Fannie Mae requires additional reserves based on the aggregate unpaid principal balance of those other loans: 2% for one to four financed properties, 4% for five to six, and 6% for seven to ten.3Fannie Mae. Minimum Reserve Requirements Individual lenders can layer stricter rules on top.
Debt Service Coverage Ratio
The debt service coverage ratio measures whether the property earns enough rent to cover its own debt payments. Lenders divide net operating income (gross rent minus operating expenses, not counting the debt payments themselves) by total annual debt service. A DSCR of 1.25 means the property earns 25% more than what’s needed. Most lenders prefer at least 1.25, though some specialized lenders accept ratios as low as 1.0. You’ll need current executed leases or a market rent appraisal to substantiate the income side.
Debt-to-Income Ratio
Personal DTI matters too. Most lenders want 43% or lower, including the projected HELOC payment along with all other monthly obligations. Rental income from the subject property usually counts toward your income, but lenders typically discount it by 25% to account for vacancy and maintenance.
Property Seasoning
Lenders often require you to have owned the property for at least six months, sometimes twelve, before you can tap the equity. This gives the value time to stabilize and lets the lender verify a track record of rent. If you recently refinanced the existing mortgage, some lenders reset the clock and impose an additional waiting period.
Rates and Costs
HELOC rates are almost always variable, built on a simple formula: the prime rate plus a lender-determined margin. Prime moves with Federal Reserve rate decisions, so your payment can change over the life of the line. For a primary residence, margins typically run from 0% to 1% above prime. For an investment property, expect 0.5% to 2% above prime, reflecting the higher risk on non-owner-occupied collateral.
Closing costs generally run 2% to 5% of the credit line. The main components are an appraisal fee (typically $300 to $500 for a standard property, higher when the appraisal includes an income analysis), an origination fee of 0.5% to 1% of the line amount, and various title and recording charges. Many lenders also charge an annual maintenance fee and some impose an early termination fee if you close the line within the first few years. Ask about all of these upfront; the annual fee and termination fee are easy to overlook and can change the math on whether a HELOC makes sense for your time horizon.
How the Draw and Repayment Periods Work
A HELOC has two phases. During the draw period, which typically lasts five to ten years, you can borrow against the line as needed and usually make interest-only payments on whatever balance you’ve drawn. When the draw period ends, you enter the repayment period, commonly 10 to 20 years. You can no longer access additional funds, and payments shift to include principal plus interest. That jump catches some investors off guard. After a decade of interest-only payments, the fully amortizing payment on the remaining balance can be substantially higher.
The Freeze Risk to Plan For
A lender can freeze or reduce your credit line after it’s been opened. If the property’s value declines or your financial circumstances change, the lender can cut your available credit regardless of whether you’ve made every payment on time. Federal law requires written notice within three business days of the freeze, including the specific reasons, and reinstatement when the triggering conditions no longer exist.4Federal Reserve. 5 Tips for Dealing with a Home Equity Line Freeze In practice, a freeze during a market downturn hits at exactly the moment you’re most likely to want the funds. Investment properties are more vulnerable than primary residences because their values move with local rental market conditions. If you’re counting on the HELOC as an emergency reserve or as dry powder for acquisitions, keep separate cash savings as a backstop.
No Right of Rescission
One protection that applies on a primary-residence HELOC does not carry over: the three-day right of rescission under the Truth in Lending Act covers only transactions secured by a consumer’s principal dwelling.5Consumer Financial Protection Bureau. 12 CFR 1026.23 – Right of Rescission Once you sign closing documents on an investment property HELOC, the deal is done. There is no cooling-off period, so review the full terms before you sit down at closing.