A home equity loan on a rental property in 2026 typically caps at 70% to 75% combined loan-to-value, wants a 700 minimum credit score, and prices 1.00 to 2.00 percentage points above the equivalent primary-residence HELOAN. Most large national banks won’t write the product at all. So who does? Portfolio community banks, credit unions with investor programs, and non-QM shops that price it against DSCR-style underwriting.
Requirements at a glance (2026)
| Underwriting item | Typical range |
|---|---|
| Credit score floor | 700 to 720 (740+ for best pricing) |
| Maximum CLTV | 70% to 75% (occasionally 80% at portfolio shops) |
| DTI limit | 43%, up to 45% with reserves |
| Cash reserves | 6 to 12 months PITIA on subject; 2 to 6 months on other financed properties |
| Seasoning | 6 to 12 months of ownership |
| Rate premium vs. primary HELOAN | +1.00 to +2.00 percentage points |
The tightening versus a primary-residence HELOAN shows up in every column. Fannie Mae’s Selling Guide (B2-1.1-01, Occupancy Types) treats non-owner-occupied collateral as a higher-risk category, and secondary-market appetite for closed-end seconds on rentals is limited.
Most lenders hold this paper on their own balance sheets.
Who actually writes this loan
The largest banks generally won’t. Chase, Bank of America, and Wells Fargo restrict their home equity products to owner-occupied primary residences and, in some cases, second homes. Regional banks and credit unions will sometimes book a rental HELOAN through their portfolio window if the borrower already has a deposit relationship there. Non-QM lenders (Truss Financial, Griffin Funding, and Spring EQ’s investor programs among them) write the product using DSCR-flavored underwriting, meaning they’ll accept documented rent alongside or in place of personal income.
Fannie Mae reopened the closed-end second-mortgage market in 2024, but that program still focuses on primary residences through mid-2026. Freddie Mac hasn’t published a comparable investor-property second. Because the agencies aren’t buying the paper, you’re dealing with a smaller pool of balance-sheet lenders, and pricing reflects that. For product mechanics on closed-end second liens generally, see our companion piece on the fixed-rate second mortgage versus cash-out refinance decision.
2026 qualification rules
Credit score
Most rental HELOAN programs set a 700 floor, with best pricing reserved for 740 and above. A handful of DSCR-adjacent programs will consider 660 to 680 if the property carries strong debt service coverage, though you should expect a rate add-on of 50 to 100 basis points.
Combined loan-to-value
The cap runs 70% to 75% at most lenders. Aggressive portfolio shops advertise 80% CLTV on single-family rentals in strong markets, though that upper bound isn’t the norm. Because the HELOAN sits behind the existing first mortgage, combined loan-to-value stacking is what the underwriter’s actually measuring–not the second-lien balance alone.
DTI and rental income
Personal DTI is capped at 43% for most conventional programs and stretches to 45% with compensating factors (12 months of reserves is the usual one). Documented rental income from Schedule E flows into the DTI calculation. Lenders typically credit 75% of gross rents to account for vacancy and maintenance, mirroring the Fannie approach on first-lien investment cash-out. For DTI on first-lien substitutes, our post on DTI limits on a cash-out refinance covers the parallel benchmarks.
Reserves
Reserves are the single biggest step up from a primary HELOAN. Expect 6 to 12 months of principal, interest, taxes, insurance, and any HOA (PITIA) on the subject property, plus another 2 to 6 months on every other financed property you own. Investors with four or more financed properties often see reserve demands stack quickly–and that stack can quietly kill a file that otherwise looks fine on credit and CLTV.
Seasoning and STR income
Purchase-date seasoning of 6 to 12 months is typical before you can draw against equity. Short-term rental income (Airbnb, VRBO) usually needs 12 to 24 months of documented history before it counts toward qualification, and some lenders classify STR income as commercial and just decline it outright.
Documentation
Two years of federal tax returns with Schedule E, the current signed lease, two months of bank statements showing rent deposits, a landlord policy plus homeowners coverage, and title vested in the borrower’s personal name at most conventional lenders. Truss Financial and select non-QM shops will accept LLC vesting. Others make you deed the property back into personal name at closing. Many landlords file as self-employed, in which case the underwriter will apply the same income-averaging rules covered in our self-employed refinance qualification guide.
Rate premium versus a primary HELOAN
The non-owner-occupied add-on runs 1.00 to 2.00 percentage points above the equivalent primary-residence HELOAN rate at the same credit score and CLTV. So a borrower who’d qualify for a 7.75% primary HELOAN in mid-2026 should model 8.75% to 9.75% on the same balance secured by a rental. The premium tightens when the borrower brings 740+ credit, sub-65% CLTV, and 12 months of reserves. And it widens on 2-to-4 unit properties, LLC-titled collateral, or STR income files.
Tax treatment in 2026: the OBBBA change
Before 2026, interest on a loan was deductible against rental income on Schedule E only when the loan was secured by the rental property itself. That rule tied deductibility to the collateral. But under the One Big Beautiful Bill Act (OBBBA), for tax years beginning in 2026, deductibility follows the use of proceeds rather than the security instrument. A HELOAN secured by your primary residence, with proceeds traced to the purchase or improvement of a rental, can produce interest deductible against that rental’s income.
Consider an investor who takes a $150,000 HELOAN against a primary residence at 8.25% and uses the proceeds to buy a $600,000 duplex rental. Pre-2026, the interest was constrained by qualified-residence rules, and Schedule E treatment was blocked because the security was the primary home. Post-2026, the same interest can be traced onto Schedule E because the money bought a rental.
Talk to a CPA before relying on this. The Schwartz & Schwartz summary of the OBBBA rental interest provision (July 2025) is a useful starting point, and our companion piece on HELOC and HELOAN interest deductibility under TCJA and OBBBA walks through the mechanics in more detail.
HELOAN on a rental versus the alternatives
| Product | LTV cap on rental | Qualifies on | First-mortgage impact |
|---|---|---|---|
| HELOAN on investment property | 70% to 75% CLTV | Personal DTI plus rent | First mortgage untouched |
| HELOC on investment property | 70% to 80% CLTV | Personal DTI plus rent | First mortgage untouched |
| Conventional cash-out refinance | 75% LTV | Full-doc personal | Replaces first mortgage |
| DSCR cash-out refinance | 75% to 80% LTV | Property DSCR of at least 1.0 | Replaces first mortgage |
So is the existing first mortgage worth protecting? That’s the whole decision, really. A borrower carrying a 3.25% first from 2021 will almost always prefer the HELOAN, absorbing the higher second-lien rate on a smaller balance rather than repricing the full first at 2026 market rates. But a borrower with a 7.5% first from 2023 or 2024 will usually run the numbers and pick a conventional cash-out refinance on an investment property instead, because the blended cost lands lower.
The overlooked 2026 play
Here’s the practical reality: the sleeper strategy is a HELOAN on the primary residence, with proceeds traced to a rental purpose. Primary-residence HELOANs are widely available, cap at 85% to 90% CLTV, price at standard HELOAN rates (not the investor premium), and, under the 2026 OBBBA traced-debt rule, produce interest that lands on Schedule E when the funds buy or improve a rental. The qualification file is easier, the pricing is better, and the tax outcome matches a rental-secured HELOAN.
But the caveats are real. The primary residence carries the debt, so a default risks your home. Tracing has to be clean. Commingling the HELOAN proceeds with personal funds before deploying them to the rental complicates the deduction–sometimes fatally. A CPA should confirm the audit trail before proceeds are drawn.
What to prepare before you apply
Before you even pick up the phone, pull tri-merge credit and confirm the middle score is at least 700. Then calculate CLTV using the current unpaid principal balance on the first mortgage plus the requested HELOAN divided by a defensible current value (a recent appraisal or automated valuation works). Verify reserves: liquid balances covering PITIA on the subject and every other financed property for 6 to 12 months. And assemble two years of Schedule E, the current lease, two months of bank statements showing rent deposits, and evidence of the landlord policy in force.
On the first call, ask the lender four questions. What’s the maximum CLTV at your credit score? Is LLC vesting permitted, or does the property have to be deeded personally? How does the lender treat STR income, if that applies? And what’s the current rate add-on versus your primary-residence HELOAN?
Frequently asked questions
Can you get a home equity loan on an investment property? Yes, but not from most large national banks. Portfolio community banks, credit unions with investor programs, and non-QM lenders write the product.
What credit score do you need? 700 is the common floor. 740+ prices best.
What’s the maximum CLTV in 2026? 70% to 75% at most lenders, occasionally 80% at portfolio shops.
Is the interest tax deductible in 2026? Under OBBBA traced-debt rules effective for tax years beginning in 2026, interest is deductible against rental income when the proceeds are traced to a rental purpose–whether the loan is secured by the rental or another property. Confirm treatment with a CPA.
Can you get a HELOAN on an LLC-titled property? Some non-QM lenders accept LLC vesting. Many conventional lenders make you hold personal title at closing.
How long do you have to own the property first? 6 to 12 months of purchase-date seasoning at most lenders, with 12 to 24 months of history required if STR income is used.
Requirements vary by lender. Confirm current thresholds before applying, and route the tax discussion to a CPA.
