DSCR Second Mortgage: Tap Rental Equity and Keep Your First Loan
A DSCR second mortgage is a loan behind your existing first mortgage on a rental property. It lets you pull cash out of the property without refinancing the first loan, and it qualifies on the property's rent instead of your personal income.
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How a DSCR second mortgage works
For investors who locked in a low rate on their first mortgage, this is often the better way to get cash for the next down payment, a rehab or reserves, because you only pay the new rate on the new money.
The lender adds the new second mortgage payment to your existing first mortgage payment, taxes, insurance and HOA dues, then compares that total to the property's rent. That's the combined DSCR. It needs to be at least 1.00.
Example: a rental is worth $500,000 with a $250,000 first mortgage at a low fixed rate. At a 75% combined loan-to-value, total loans can reach $375,000, so the second mortgage could be up to about $125,000, as long as the rent covers both payments. Read more about the DSCR second lien.
Watch: DSCR Home Equity Loans for Rental Properties (No Tax Returns), with Trevor Gravink.
Second mortgage (HELOAN) vs. HELOC
- DSCR second mortgage or DSCR HELOAN: one lump sum at a fixed rate with a set payment. Best when you know exactly how much you need.
- DSCR HELOC: a credit line you draw from as needed, often with interest-only payments during the draw period. Best for rehabs or keeping cash ready for the next deal.
Compare them in DSCR HELOC vs. HELOAN.
Second mortgage vs. cash-out refinance
A cash-out refinance replaces your whole first mortgage at today's rate. If your current rate is much lower than today's rates, a second mortgage usually costs less overall because the low rate stays on most of your balance. If your first mortgage rate is high, or it's coming due, a cash-out refinance may be better. See DSCR HELOAN vs. HELOC vs. cash-out refinance.
DSCR second mortgage requirements
These are typical ranges across the lenders we work with.
| Typical range | |
|---|---|
| Credit score | 680 minimum; 720+ for the highest loan-to-value |
| Combined loan-to-value | Up to 80% of the property's value counting both loans (720+ credit, loans up to $350,000); 75% on 2–4 units and condos |
| Combined DSCR | 1.00 minimum; higher earns better pricing |
| Loan amount | $100,000 to $750,000 |
| Property types | 1–4 unit rentals and warrantable condos; no rural properties |
| First mortgage | Must stay in place and be current; most lenders want no late payments in the last 12 months |
| Income documents | Lease or the appraiser's market rent; no tax returns |
| Ownership | Personal name or LLC, depending on the lender |
Your loan options
We have DSCR second mortgages and HELOCs, plus full doc and bank statement versions for borrowers who want to use their income. The more documentation you provide, the lower the rate tends to be. We'll walk through which options you'd likely qualify for and which one fits your timeline.
Mistakes to avoid
- Not checking the combined DSCR first. The rent has to cover both loans. A second mortgage that pushes the DSCR below 1.0 may not qualify, or may cost more.
- Using the seller's tax bill. If you bought recently, make sure the payment uses your current property taxes, not the old ones.
- Forgetting about rural properties. Many lenders won't do second mortgages on rural properties, or they lower the max loan amount. Tell us up front.
- Assuming the title can be in any name. Some lenders need the second mortgage in the same name or LLC as the first. Check before you apply.
Real results
"Trevor did a great job helping me out with a HELOC. He made the whole process really easy to understand, he gave multiple options and outlined exactly what everything meant and helped guide me into what was the best solution for what I was looking for. This was the second time working with Trevor, and he is the only person I would go back to in the future."
— Max S., 5-star Google review
A full-time investor with about 20 units used a second mortgage to pull equity from a 4-unit rental, qualifying with a CPA-prepared profit and loss statement instead of the rent. The loan hit bumps and setbacks along the way, and we got it to the finish line.
"…Trevor handled the bumps and setbacks like a champ and got us over the finish line… I'm a full time investor with 20-ish units, and loans are usually a nightmare. Trevor turned it into a semi-smooth, walkable path."
— Darwin C., 5-star Google review
Reviews from our clients
DSCR second mortgage FAQ
Can I get a second mortgage on a rental property?
Yes. DSCR second mortgages and HELOCs are made for rental properties and qualify on the rent.
How much can I borrow?
Up to 80% of the property's value, counting both your first mortgage and the new loan.
Do I need tax returns?
No, not on DSCR programs. Full doc and bank statement versions are available if you'd rather use your income.
Will this change my first mortgage?
No. Your first mortgage, rate and payment stay the same.
Can I use the money to buy another property?
Yes. Many investors use a second mortgage or HELOC for the next down payment or a rehab.
Is a HELOC or a fixed second mortgage better?
A fixed second is better when you need a set amount now; a HELOC is better when you'll draw over time. See DSCR HELOC requirements.
More investor loans
- DSCR loansQualify on the rent, not your income
- Today's DSCR ratesWhere rates start this week
- DSCR refinanceRate-and-term and cash-out on rentals
- Short-term rental loansQualify on Airbnb and VRBO income
- Fix and flip loansPurchase plus rehab, based on the deal
- All investor loansCompare every option side by side
Get your DSCR second mortgage quote
Answer a few quick questions about the property and your plans. There's no credit check to see your options, and we'll shop your scenario across our lenders.
Prefer to talk first? Call (619) 404-6637 or book a free consultation.
Business-purpose loans for non-owner-occupied investment properties. Programs, guidelines and ranges shown are typical of the wholesale lenders we work with and can change at any time. Not a commitment to lend. Broker Buddy LLC, Trevor Gravink NMLS #1707407.
STEP 1
Apply Online or Call Directly
Find out how much home you can buy or discover how much you can save by refinancing.
STEP 2
Review What Options You Can Qualify For
Learn exactly how much you qualify for and what you would save by working with us.
STEP 3
Get Loan Approval in 24 Hours (weekdays)
Get mortgage loan approval to move forward with your property.
Broker Buddy LLC
Trevor Gravink
Mortgage Consultant
CEO/Owner
(619) 404-6637
NMLS: 1707407
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5371 Wilshire Dr. San Diego, CA 92116
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