Can I get a HELOC using bank statements?

Most banks qualify a HELOC the same way they qualify a mortgage: two years of tax returns. If you own a business, your returns often show far less income than you really earn, because of legitimate write-offs. That's why many self-employed homeowners with plenty of equity get turned down.

A bank-statement HELOC works differently. The lender reviews 12 or 24 months of your personal or business bank statements, counts the regular deposits, takes out transfers and one-time items, and uses the average as your income. With business statements, an expense factor or a CPA-prepared profit and loss statement is applied, since deposits are not the same as take-home pay. No tax returns are needed to qualify.

Expect stricter terms than a standard HELOC. Bank-statement programs usually require a higher credit score, often around 700 or better, and lend a little less against your home's value, commonly up to about 80–85% of the value combined with your first mortgage. Rates are typically higher than full-documentation HELOCs. In exchange, you get a line of credit you can draw on as needed, and your low first-mortgage rate stays exactly where it is.

These programs can be used on a primary home, and some lenders also allow second homes and rental properties. In Texas, a HELOC on your homestead is limited by state law to 80% of the home's value combined with your other loans, so the amount available there may be lower.

You can check whether you qualify with a soft credit pull, which does not affect your credit score. A full credit check only happens later, if you decide to move forward.