What they are
- DSCR HELOC: a revolving line. It suits staged rehab, standby reserves, or funds held ready for an acquisition.
- DSCR second mortgage (also called a DSCR HELOAN): a closed-end second with a lump sum and a fixed structure. It suits a specific payoff, one project, or a down payment.
Why a second lien instead of refinancing
- It protects a low first-mortgage rate: only the new money is priced at today's rates
- It unlocks appreciation that's otherwise trapped in the property
- It avoids underwriting a Schedule E that depreciation has reduced
When a full refinance wins
If your existing rate is unremarkable, or you'd rather carry one loan than two, a DSCR cash-out refinance is the simpler structure. At $100,000 and above it has no title seasoning and uses the current appraised value.
How qualifying works
- The rent — from the actual lease or a market-rent estimate — is measured against the payment
- No tax returns, W-2s, or debt-to-income ratio
- A soft credit review to see your options
- To start: ID, mortgage statement, insurance, and the lease or a market-rent estimate
The one number that's published
75% maximum combined loan-to-value: the first mortgage balance plus the new second, divided by the property's value. Credit floors, pricing, minimum DSCR, and loan amounts depend on the scenario and the lender, and take about a ten-minute call with the address, the rent, what you owe, and a ballpark score.
Good to know.
What is a DSCR HELOC?+
A revolving second-lien line of credit on an investment property, qualified on the rent.
What is a DSCR second mortgage?+
A closed-end, lump-sum second lien (a HELOAN), qualified the same way.
Do I need tax returns?+
No. The starting documents are an ID, the mortgage statement, insurance, and the lease or a rent estimate.
Does it affect my first mortgage?+
No. It sits behind it.
Can the property be in an LLC?+
Yes. 1–4 unit investment properties in an LLC or a personal name.
What credit score and loan-to-value?+
Up to 75% combined loan-to-value. The credit requirement depends on the scenario; there's no hard pull to see your options.
DSCR HELOC or DSCR cash-out refinance?+
It depends on your existing first-mortgage rate. Both are available.
Line or lump sum?+
If you know the number you need, take the lump sum. If you want flexibility, take the line.