'/%3e%3cpath%20d='M110.5%2074.84L61.56%20113.3V150.04H0V87.4L110.5%200V74.84Z'%20fill='url(%23paint1_linear_1102_1766)'/%3e%3cpath%20d='M159.44%20150.04L159.44%20205.81H159.2L110.5%20166.53L61.8001%20205.81H61.5601L61.56%20150.04L110.5%20110.57L159.44%20150.04Z'%20fill='url(%23paint2_linear_1102_1766)'/%3e%3cpath%20d='M110.5%20110.57V166.53L61.8001%20205.81H61.5601L61.56%20150.04L110.5%20110.57Z'%20fill='url(%23paint3_linear_1102_1766)'/%3e%3cpath%20d='M159.44%20206H61.5601L61.8001%20205.81L110.5%20166.53L159.2%20205.81L159.44%20206Z'%20fill='url(%23paint4_linear_1102_1766)'/%3e%3cdefs%3e%3clinearGradient%20id='paint0_linear_1102_1766'%20x1='166'%20y1='-19.908'%20x2='145.641'%20y2='227.731'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.723958'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint1_linear_1102_1766'%20x1='64'%20y1='15.7891'%20x2='172.309'%20y2='257.652'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%239383FF'/%3e%3cstop%20offset='0.75'%20stop-color='%234D3FED'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint2_linear_1102_1766'%20x1='171.462'%20y1='36.6188'%20x2='8.598'%20y2='270.272'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20offset='0.229167'%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.994792'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint3_linear_1102_1766'%20x1='55.7219'%20y1='-31.3876'%20x2='76.8187'%20y2='349.172'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20offset='0.307292'%20stop-color='%239383FF'/%3e%3cstop%20offset='0.854167'%20stop-color='%234D3FED'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint4_linear_1102_1766'%20x1='110'%20y1='271'%20x2='76.5255'%20y2='202.314'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.90625'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3c/defs%3e%3c/svg%3e)
'/%3e%3cpath%20d='M110.5%2074.84L61.56%20113.3V150.04H0V87.4L110.5%200V74.84Z'%20fill='url(%23paint1_linear_1102_1752)'/%3e%3cpath%20d='M159.44%20150.04L159.44%20205.81H159.2L110.5%20166.53L61.8001%20205.81H61.5601L61.56%20150.04L110.5%20110.57L159.44%20150.04Z'%20fill='url(%23paint2_linear_1102_1752)'/%3e%3cpath%20d='M110.5%20110.57V166.53L61.8001%20205.81H61.5601L61.56%20150.04L110.5%20110.57Z'%20fill='url(%23paint3_linear_1102_1752)'/%3e%3cpath%20d='M159.44%20206H61.5601L61.8001%20205.81L110.5%20166.53L159.2%20205.81L159.44%20206Z'%20fill='url(%23paint4_linear_1102_1752)'/%3e%3cdefs%3e%3clinearGradient%20id='paint0_linear_1102_1752'%20x1='166'%20y1='-19.908'%20x2='145.641'%20y2='227.731'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.723958'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint1_linear_1102_1752'%20x1='64'%20y1='15.7891'%20x2='172.309'%20y2='257.652'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%239383FF'/%3e%3cstop%20offset='0.75'%20stop-color='%234D3FED'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint2_linear_1102_1752'%20x1='171.462'%20y1='36.6188'%20x2='8.598'%20y2='270.272'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20offset='0.229167'%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.994792'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint3_linear_1102_1752'%20x1='55.7219'%20y1='-31.3876'%20x2='76.8187'%20y2='349.172'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20offset='0.307292'%20stop-color='%239383FF'/%3e%3cstop%20offset='0.854167'%20stop-color='%234D3FED'/%3e%3c/linearGradient%3e%3clinearGradient%20id='paint4_linear_1102_1752'%20x1='110'%20y1='271'%20x2='76.5255'%20y2='202.314'%20gradientUnits='userSpaceOnUse'%3e%3cstop%20stop-color='%23B5AAFF'/%3e%3cstop%20offset='0.90625'%20stop-color='%238977FF'/%3e%3c/linearGradient%3e%3c/defs%3e%3c/svg%3e)
Rental property equity
HELOC on an Investment Property: Requirements and Alternatives
Why most banks decline HELOCs on rental properties, what the few that offer them require, and the alternatives that skip the bank entirely.
Jerry Chu
Co-founder & CEO, Lofty
Why banks say no to rental HELOCs
A HELOC sits in second position behind your mortgage. If a borrower defaults, the HELOC lender only gets paid after the first mortgage, and lenders believe owners fight harder to save their own home than a rental. That risk math is why the majority of retail banks restrict HELOCs to primary residences, and why the remaining lenders price rental HELOCs meaningfully higher.
What lenders require when they do offer one
Expect the full underwriting treatment, tougher than what you saw on your primary home.
- Credit score of roughly 700-720 or better.
- Combined loan-to-value (first mortgage plus HELOC) capped around 70-80%.
- Six to twelve months of cash reserves for the property’s expenses.
- Documented rental income, often with seasoning requirements on the property.
- Variable rates typically 1-3 points above primary-home HELOCs.
DSCR HELOCs and investor products
A niche of investor-focused lenders offers DSCR (debt service coverage ratio) HELOCs and second mortgages that qualify you on the property’s rental income instead of your personal tax returns. They solve the documentation problem for self-employed investors, but the fundamentals stay the same: second-lien debt, variable rates usually in the high single digits or above, and combined loan-to-value caps around 70-75%.
The no-debt alternative: sell a share of your equity
If the goal is cash without a new monthly payment, you can skip the bank entirely. On Lofty, rental owners list their property and sell the percentage of equity they choose to investors at their own price. There is no credit check, no income documentation, and no debt. Your existing mortgage and its rate stay exactly as they are, and you keep collecting rent on the share you keep. The cost is a 3% marketplace fee when you sell, plus sharing future rent and appreciation on the portion sold.
Rental HELOCs vs. the alternatives
Rental HELOC
- Best for
- Strong-credit owners who want flexible, revolving access to cash.
- Tradeoff
- Hard to find, variable rates, and strict qualifying.
Home equity loan (second mortgage)
- Best for
- Owners who want a fixed lump sum behind a low first mortgage.
- Tradeoff
- Fixed payment starts immediately; availability on rentals is limited.
DSCR HELOC or second
- Best for
- Self-employed investors who qualify on rental income.
- Tradeoff
- Higher rates and fees than bank products.
Sell equity on Lofty
- Best for
- Owners who want cash with no debt, payment, or credit check.
- Tradeoff
- Investors share future rent and appreciation on the portion sold.
Risks of borrowing against a rental
- HELOC rates are usually variable. Payments can rise substantially if rates climb during your draw or repayment period.
- A HELOC is secured by the property. Missed payments put the rental at risk of foreclosure even if your first mortgage is current.
- Interest-only draw periods end. Many borrowers are surprised when the repayment period starts and payments jump.
- Lenders can freeze or reduce HELOC lines when property values fall, sometimes exactly when you need the liquidity most.
- Selling equity is not debt, but it permanently shares the sold portion’s future rent and appreciation unless you buy it back.
Real estate calculators
Frequently asked questions
- Can you get a HELOC on an investment property?
- Yes, but far fewer lenders offer them than primary-home HELOCs. Expect a 700-720 minimum credit score, a 70-80% combined loan-to-value cap, significant cash reserve requirements, and higher variable rates. Community banks, credit unions, and investor-focused lenders are the most likely sources.
- Why won’t my bank give me a HELOC on my rental?
- Second liens on investment properties are among the riskiest consumer loans a bank can make: they are second in line to get paid, and rentals default at higher rates than primary homes. Many banks decided the product is not worth the risk and simply do not offer it.
- What credit score do I need for an investment property HELOC?
- Most lenders that offer them want 700-720 or better, and the best pricing goes to 740+. Some investor-focused DSCR products accept lower scores, around 660-680, in exchange for higher rates.
- What are the alternatives to a HELOC on a rental property?
- The main alternatives are a fixed home equity loan, a cash-out refinance, a DSCR second mortgage, a home equity investment (HEI), or selling a share of the property’s equity to investors on a marketplace like Lofty. The right choice depends on your current mortgage rate, credit profile, and whether you want new debt at all.
- Is selling equity better than a HELOC?
- They solve different problems. A HELOC is best when you want revolving access to modest amounts and can qualify. Selling equity is best when you want a larger amount of cash with no monthly payment, no qualifying, and no risk of rate resets, and you are comfortable sharing the sold portion’s future rent and appreciation.
About Jerry Chu
Jerry leads Lofty, a fractional real estate investing platform used by tens of thousands of investors. He writes about how everyday investors can access rental property income without the friction of becoming a landlord.
Related guides
Rental property equity
Pulling equity out of a rental
Compare every practical way to turn rental property equity into cash: cash-out refinance, HELOC, home equity loan, home equity investment, and selling equity to investors.
Rental property equity
Rental cash-out refinance
When a cash-out refinance makes sense on an investment property, what it really costs in 2026, and the alternatives that let you keep your low mortgage rate.
Rental property equity
Home equity investments
How Hometap, Point, and Unlock home equity investments work, how they treat rental properties, and how selling equity on a marketplace compares.