DSCR Direct

Understanding HELOC Payments

A Home Equity Line of Credit (HELOC) works in two phases. During the draw period (typically 5-10 years), you only pay interest on what you have borrowed - making payments low and flexible. You can draw funds, repay them, and draw again up to your credit limit. Once the draw period ends, the repayment period begins (typically 10-20 years), and your payment jumps significantly because you are now paying both principal and interest on a fully amortized schedule.

This payment shock catches many borrowers off guard. A $150,000 HELOC at 8.5% costs just $1,063 per month during the interest-only draw period. When repayment kicks in, that payment can jump to $1,302 or more depending on the repayment term. Planning for this increase is critical.

HELOCs on primary residences are widely available from banks and credit unions. However, getting a HELOC on an investment property is significantly more difficult. Most traditional lenders either do not offer investment property HELOCs or have extremely strict requirements - high credit scores, low combined LTV, full income documentation, and limited availability.

DSCR HELOCs for Investment Properties

DSCR HELOC programs are designed specifically for real estate investors who need flexible access to their rental property equity. Unlike traditional HELOCs, DSCR HELOCs qualify based on the property's rental income rather than your personal income. No tax returns, no W-2s, no income verification required. This makes them ideal for self-employed investors, portfolio landlords, and anyone who takes aggressive tax write-offs.

• No income documentation - qualify on the property's cash flow
• Investment property eligible - access equity in your rentals
• Flexible draw - use funds for renovations, down payments on new deals, or reserves
• Close in an LLC - keep asset protection in place