DSCR HELOC & DSCR Second Mortgage. Tap rental equity without touching your first mortgage — or your tax returns.

Written by the Cap Rate Funding team, Irvine, CA · Last reviewed: August 27, 2026 · Questions? Call/text 949-738-9770

Cap Rate Funding (powered by Federal First Lending LLC, NMLS #2381991) is an Irvine, California mortgage brokerage offering DSCR HELOCs and DSCR second mortgages on investment properties: second-lien equity access qualified on the property’s rental income — debt-service coverage — instead of tax returns or personal income. Maximum combined LTV is 75% on both structures. Priced across a network of 100+ wholesale lenders; remaining terms are scenario-specific and confirmed on a quick call. Rated 5.0 on Google by real clients.

What a DSCR HELOC and a DSCR second mortgage are

Both are second liens on an investment property that qualify the DSCR way: the underwriter compares the property’s rent to its housing payment, and if the cash flow supports the deal, the deal works — no tax returns, no W-2s, no personal income calculation, no debt-to-income ratio built off your 1040.

The difference between the two is the shape of the money. A DSCR HELOC is a revolving credit line — draw what you need, when you need it, and reuse the line as you pay it down; the natural fit for staged rehab budgets, reserves you want on standby, or an acquisition war chest. A DSCR second mortgage (a closed-end second, sometimes called a DSCR HELOAN) is a one-time lump sum with fixed structure — the natural fit when you know the number: paying off a specific debt, one defined project, or a down payment on the next property.

Why investors use a second lien instead of refinancing

The rate you’re protecting. If your rental’s first mortgage carries a rate from a better era, a cash-out refinance destroys it — every dollar you pull out reprices your entire balance. A second lien takes nothing from the first: only the new money is at today’s pricing. The bigger the gap between your existing rate and current rates, the more decisively the second lien wins that math.

The equity that’s just sitting there. Rentals bought or refinanced years ago are often loaded with appreciation the owner can’t reach without disturbing the loan. A DSCR second turns that trapped equity into deployable capital — the down payment on the next door, the rehab that raises the rent, the payoff of expensive debt.

The tax returns you don’t want underwritten. Every landlord’s Schedule E is engineered to minimize taxable income — depreciation alone sees to that. DSCR qualifying sidesteps the entire conversation: the rent covers the payment, or it doesn’t. That’s the file.

If a full refinance does make sense for your scenario — your existing rate is nothing special, or you want one loan instead of two — our no-seasoning DSCR cash-out qualifies on current appraised value with no title seasoning on loans of $100K+. We’ll tell you honestly which structure your numbers favor.

How qualifying works

The property carries the file: its rent (actual lease or market rent) is measured against its payment. Vesting in a personal name or an LLC both work, on 1–4 unit investment properties. Combined leverage — your first mortgage plus the new second — caps at 75% of the property’s value on both the HELOC and the closed-end second. Seeing your options starts with a soft credit review — no hard pull — and the typical starting documents are the ones you already have: ID, mortgage statement, insurance, and the lease or a market-rent estimate. No tax returns.

The one number we publish — and why the rest come on a call

The hard cap: 75% maximum combined LTV on both the DSCR HELOC and the DSCR second mortgage — your first mortgage balance plus the new second, measured against the property’s value. Beyond that, FICO floors, pricing, and minimum ratios genuinely vary — by lender, by property type, by the coverage ratio itself — and they move. We price these across 100+ wholesale lenders rather than one rulebook, so publishing a single set of those numbers would either oversell some scenarios or undersell others. The honest version: bring the address, the rent, what you owe, and a ballpark credit score to a ten-minute call — 949-738-9770 — and you’ll leave it with real terms for your actual file, not a brochure’s.

Where Cap Rate Funding fits

DSCR lending is our specialty — standard DSCR loans, long- and short-term rental financing, the no-seasoning cash-out, and the second-lien structures on this page. For owner-occupied homes, the same keep-your-first-mortgage logic lives in our 5-Day HELOC and no income verification HELOC.

Common questions

What is a DSCR HELOC?

A revolving home equity line of credit on an investment property, qualified on the property’s rental income (its debt-service coverage ratio) instead of the owner’s tax returns or personal income. It sits as a second lien behind the existing first mortgage, which stays completely untouched.

What is a DSCR second mortgage?

A closed-end second lien — a one-time lump sum against an investment property’s equity, qualified DSCR-style on the property’s rent. Sometimes called a DSCR HELOAN. Same second-lien logic as the DSCR HELOC, but fixed lump-sum structure instead of a revolving line.

Do I need tax returns for a DSCR HELOC or DSCR second mortgage?

No. DSCR qualifying is built on the property’s rent versus its payment — no tax returns, no W-2s, no personal income documentation. The typical starting file is ID, your mortgage statement, insurance, and the lease or a market-rent estimate.

Will it affect my first mortgage or its rate?

No — that’s the whole point of the second-lien structure. Your existing first mortgage, its balance, and its rate stay exactly as they are; only the new second lien is at current pricing. A cash-out refinance, by contrast, replaces the entire first mortgage at today’s rates.

Can I get one if the property is owned by my LLC?

Yes — LLC vesting is normal in DSCR lending, on 1–4 unit investment properties. Personal-name vesting works too.

What credit score and CLTV do I need?

The maximum combined LTV is 75% on both the DSCR HELOC and the DSCR second mortgage. FICO floors and pricing are scenario-specific — they vary by lender, property, and the coverage ratio itself, which is why we don’t publish a single set of those numbers. We price your file across 100+ wholesale lenders and give you real terms on a quick call: 949-738-9770. Seeing your options involves no hard credit pull.

DSCR HELOC vs. DSCR cash-out refinance — which is better?

It usually comes down to your existing first-mortgage rate. If it’s low, the second lien protects it and only the new money is at today’s pricing. If your existing rate is unremarkable — or you want one loan instead of two — the no-seasoning DSCR cash-out (appraised value, no title seasoning at $100K+) can win. We offer both and will run both sets of numbers.

Line of credit or lump sum — how do I choose?

Know the exact number you need? The closed-end second (lump sum) fits — one defined project, a specific payoff, a down payment. Want flexibility — staged rehab draws, standby reserves, dry powder for the next deal? The revolving DSCR HELOC fits. Plenty of investors decide on the call once they see how each prices for their file.

Not a commitment to lend. Second-lien DSCR program terms are scenario- and state-specific and change without notice; all figures confirmed in writing for your file. All loans subject to credit approval. Equal Housing Opportunity.