What is a bank-statement HELOC?
A bank-statement HELOC combines a home equity line of credit with an alternative way to document self-employed income. Eligible bank statements help the lender evaluate earnings. The credit line is secured by your home and is separate from an existing first mortgage. That can make it worth exploring when you want access to equity without replacing the mortgage you already have.
A real business owner's story
Room to grow his business, without replacing his first mortgage
A self-employed homeowner in Marysville wanted to buy out his business partner and take full ownership of the company he had helped build. His business had strong cash flow, but traditional income documentation was not the best fit. He also wanted to keep his existing first mortgage.
His home was worth approximately $900,000, with about $300,000 remaining on his first mortgage at 3.625%. We reviewed 12 months of business bank statements to document eligible income, and he was approved for a $200,000 bank-statement home equity line of credit.
He used part of the line to buy out his partner, leaving unused credit available for future needs under the line's terms. His existing first mortgage stayed in place. Those amounts and that first-mortgage rate describe this client's experience, not a current HELOC rate or an offer.
Read the Full Story in My BlogBank-statement HELOC guidelines to know
Here are the key guidelines for this bank-statement HELOC option. I will help you review how they fit your income, home equity, and plans.
- Credit: Minimum 680 score, with additional credit-history restrictions.
- Line size: Up to $500,000.
- Equity: Maximum 65% combined loan-to-value, including existing mortgage debt and the proposed line.
- Business history: At least two years self-employed and 100% business ownership; joint applicants may meet ownership together.
- Statements: 12 months for lines up to $250,000; 24 months above that.
- Income calculation: Generally 100% of eligible personal deposits or 50% of eligible business deposits, subject to exclusions and adjustments.
- Structure: A 10-year draw period followed by 20-year repayment; variable pricing.
- Location: This HELOC option is unavailable in Texas.
We will review your current mortgage, property, debts, and repayment plan together. Bank-statement HELOC guidelines are separate from bank-statement first-mortgage guidelines.
How borrowing and repayment work
A HELOC generally allows borrowing from an approved line during a draw period, followed by a repayment period. The agreement determines minimum draws, required payments, and whether repaid principal becomes available to borrow again. Interest is generally charged on the amount you draw, rather than the unused credit limit; fees and minimum-draw requirements can still apply. Review both stages before choosing a line. A flexible source of funds works best with a clear spending plan and a plan for paying back what you use.
What determines the available line?
The lender reviews the property value, existing mortgage balances, permitted combined borrowing, credit, income, and other obligations. Your equity is not the same as the amount available to borrow. Bank statements help document qualifying income, but they do not replace the equity or property review. I will help you understand the relevant requirements before you plan a project around a particular amount.
Keep the payment changes in view
HELOCs commonly have variable rates, so payments can change. Payments may also rise when the draw period ends and principal repayment begins. Ask about the rate structure, fees, minimum draws, and repayment schedule for the actual line. Because your home secures the debt, missing payments can put it at risk. The CFPB HELOC overview explains these core features.
Compare it with your other home equity options
A line of credit may suit expenses spread over time. A lump-sum home equity loan may suit a defined cost, while a cash-out refinance replaces the first mortgage. Compare home equity loans and HELOCs and refinance options using total payments and costs. If you are buying a home instead, explore a bank-statement mortgage.
Let's start with your goals
Tell me what you want your equity to make possible, whether that is improving your home, supporting your business, or covering expenses over time. We will review your documentation together, compare the relevant options, and map out the next steps. You do not have to figure out which program fits before we talk.
Frequently asked questions
Can I keep my existing first mortgage?
A HELOC is a separate loan and can allow you to keep an eligible existing first mortgage. We will review the property, current financing, and combined borrowing requirements.
Do bank statements replace every other requirement?
No. They provide an alternative way to document income. Credit, debts, equity, property eligibility, and other requirements still apply.
Is a HELOC the same as a home equity loan?
No. A HELOC is a line of credit with borrowing governed by its draw-period terms. A home equity loan generally provides a lump sum with its own repayment schedule.
What should I bring to the first conversation?
Bring your current mortgage statement, recent bank statements, and an outline of how much you want to borrow and why. I will confirm the income-documentation period and additional documents needed for review.
Explore the Self-Employed Borrower hub or return to the loan program library. Program availability, documentation, and terms depend on the loan and your circumstances. I will confirm the requirements for your application.