Bank Statement HELoC
Home Equity Line of Credit (HELOC) lets homeowners borrow money using the value they’ve built up in their home — without changing their current mortgage. It works like a credit card: you get a set credit limit and can borrow from it as needed. You only pay interest on what you use, and during the draw period, you can choose to make interest-only payments. There are no rules on how you spend the money.
❌ What’s Not Required for a Bank Statement Loan:
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Tax Returns
You don’t need to provide 1 or 2 years of federal tax returns (1040s), which are typically required for income verification on traditional loans. -
W-2 Forms
These loans do not require W-2s since borrowers aren’t salaried employees. -
Paystubs
You won’t need to submit paystubs from an employer, as income is verified via deposits. -
Traditional Employment Verification
No need for a written Verification of Employment (VOE) from a company HR department. -
Debt-to-Income (DTI) Ratio Calculation (in some cases)
Many bank statement lenders use bank deposits as a proxy for income and may not calculate a formal DTI. -
Personal Bank Statements (if using business bank statements only)
If you choose to use business statements, some lenders allow you to avoid submitting personal ones (and vice versa, depending on the structure). -
Full Documentation of All Business Expenses
While expenses may be factored in as a percentage (usually 50%), borrowers don’t have to show itemized profit-and-loss statements unless specifically requested.
✅ Instead, What Is Needed:
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12 or 24 months of consecutive personal or business bank statements
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Proof of self-employment (like a business license, CPA letter, or incorporation documents)
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A good to strong credit score (often 620–700+)
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A reasonable down payment (typically 10%–20%)
✅ Bank Statement HELOCs – At a Glance
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No Tax Returns Required
Instead of using W-2s or tax returns, borrowers qualify based on bank statement deposits (usually 12 or 24 months). -
Ideal for Self-Employed Borrowers
Great for business owners, freelancers, and independent contractors with non-traditional income. -
Use Equity Without Refinancing
Allows homeowners to tap into their home’s equity without touching their first mortgage. -
Flexible Use of Funds
Borrowers can use the credit line for any purpose: home improvements, investments, business needs, or debt consolidation. -
Revolving Line of Credit
Works like a credit card — borrow, repay, and borrow again within the approved limit. -
Interest-Only Payments Available
During the draw period (typically 10 years), borrowers can make interest-only payments. -
Credit Limits Based on Equity & Income
Loan amounts are based on the borrower’s home equity and bank statement-verified income. -
Personal or Business Bank Statements Accepted
Lenders may allow either, depending on documentation and underwriting guidelines. -
Higher Credit Score Preferred
While flexible, most programs require a minimum credit score, often starting at 660+. -
Alternative to Traditional Loans
Useful for borrowers who don’t qualify for conventional HELOCs due to complex or fluctuating income.