HELOC Requirements: What You Need to Qualify in 2026

You've got equity in your home. You've got plans for that money. But here's the question that keeps people up at night: Do I actually qualify for a HELOC?

Good news: HELOC requirements aren't as strict as you might think. Most lenders want at least 15% equity, a 620+ credit score, and debt that doesn't exceed 43% of your income. Hit those marks, and you're likely in.

But here's what the other guides won't tell you: there's flexibility in almost every requirement. Lenders differ. Compensating factors matter. And knowing where the wiggle room exists can make the difference between approval and rejection.

Let's break down exactly what you need—and what to do if you're on the edge.

Not sure where you stand? Check your HELOC eligibility in 2 minutes → (soft pull, won't affect your credit)

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The 5 Core HELOC Requirements

Here's the quick overview. We'll dig into each one below.

Key insight: These are ranges, not hard lines. A weak spot in one area can often be offset by strength in another.

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1. Home Equity: How Much Do You Need?

The foundation of any HELOC is your equity—the difference between what your home is worth and what you still owe on it.

The 80% Rule

Most lenders cap your combined loan-to-value (CLTV) at 80-85%. Here's what that means in real numbers:

• Home value: $400,000
• Current mortgage balance: $280,000
• Your equity: $120,000 (30%)
• Max CLTV at 80%: $320,000
• Available to borrow: $320,000 - $280,000 = $40,000 HELOC

Some lenders go up to 85% or even 90% CLTV, which would unlock more—but expect stricter requirements elsewhere and higher rates.

HELOC Minimum Requirements for Equity

The typical minimum is 15-20% equity. Here's the math:

What If You Don't Have Enough Equity?

You have options:

1. Wait it out. Home values may rise. Every mortgage payment builds equity.
2. Pay down your mortgage. A lump sum toward principal increases equity instantly.
3. Request a property reassessment. If your home's value has increased, an updated appraisal might put you over the line.
4. Consider alternatives. A personal loan or credit card might bridge smaller gaps (though at higher rates).

→ Calculate your home equity →

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2. Credit Score Requirements

Your credit score is the first thing most lenders check. Here's how the tiers typically break down:

HELOC Credit Score Tiers

The Minimum Credit Score for HELOC

Most mainstream lenders set 620 as the floor. But "minimum" doesn't mean "optimal." At 620, you'll face:

• Higher interest rates (sometimes 2-3% above prime)
• Lower credit limits
• More documentation requirements
• Possible denial if other factors are weak

At 700+, you're in a much stronger position—better rates, more lender options, and faster approvals.

Can You Get a HELOC with Bad Credit?

Possibly. If your score is below 620, you're not automatically out. Some pathways:

1. Non-QM lenders. These specialize in borrowers outside traditional boxes. Expect higher rates.
2. High equity compensation. 40%+ equity can offset credit concerns for some lenders.
3. Co-borrower. Adding someone with stronger credit can unlock approval.
4. Credit improvement. Sometimes waiting 3-6 months to boost your score is the smarter move.

Quick wins to raise your score:

• Pay down credit card balances below 30% utilization
• Dispute errors on your credit report (free at AnnualCreditReport.com)
• Don't open new credit accounts before applying
• Become an authorized user on someone's old, good-standing account

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3. Debt-to-Income Ratio (DTI)

DTI measures how much of your monthly income goes toward debt payments. Lenders use it to gauge whether you can handle another payment.

How to Calculate Your DTI

Monthly debt payments ÷ Monthly gross income = DTI

Example:

• Mortgage: $1,800
• Car payment: $400
• Credit card minimums: $200
• Student loans: $300
• Total monthly debt: $2,700
• Monthly gross income: $7,500
• DTI: $2,700 ÷ $7,500 = 36%

HELOC DTI Requirements

Important: Your future HELOC payment gets added to this calculation. Lenders estimate what you'd owe if you maxed out the line.

How to Lower Your DTI

1. Pay off a debt entirely (car loan, credit card)
2. Increase your income (raises, side income, adding a co-borrower's income)
3. Request a smaller HELOC amount
4. Refinance existing debt to lower monthly payments

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4. Income and Employment Verification

Lenders need to know you can actually make the payments. That means proving stable, verifiable income.

What Counts as Income?

• W-2 employment: The easiest to verify. Pay stubs + W-2s + employer verification.
• Self-employment: 2 years of tax returns, profit & loss statements, possibly bank statements showing deposits.
• Rental income: Lease agreements + tax returns showing rental income.
• Retirement income: Pension statements, Social Security statements, 401(k) distribution history.
• Gig work / 1099: 2 years of tax returns showing consistent income.

Self-Employed? Expect More Documentation

If you're your own boss, lenders want to see:

• 2 years of personal tax returns
• 2 years of business tax returns (if applicable)
• Year-to-date profit & loss statement
• Business bank statements (3-6 months)
• Business license or incorporation documents

The extra paperwork is annoying, but it's standard. Plan for it.

How Much Income Do You Actually Need?

There's no fixed dollar amount—it depends on the HELOC size and your other debts. The DTI calculation above is what really matters. A $50,000/year income can qualify for a substantial HELOC if debts are low.

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5. Property Requirements

Not every property qualifies for a HELOC. Here's what lenders look for:

Properties That Typically Qualify

• ✅ Single-family homes (primary residence)
• ✅ Townhouses
• ✅ Condos (with some restrictions)
• ✅ Second homes (some lenders)

Properties That May Not Qualify

• ❌ Investment/rental properties (many lenders exclude these)
• ❌ Manufactured homes (especially older ones)
• ❌ Homes with title issues or liens
• ❌ Properties in poor condition
• ❌ Unusual property types (houseboats, tiny homes, etc.)

Can I Get a HELOC on a Second Home?

Some lenders allow HELOCs on second homes or vacation properties—but requirements are usually stricter (higher equity, better credit). Investment properties with rental tenants are harder; many lenders don't offer HELOCs on them at all.

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Documents You'll Need to Apply

Start gathering these before you apply to speed things up:

Identification:

• Government-issued ID (driver's license, passport)
• Social Security number

Income:

• Pay stubs (most recent 2-4 weeks)
• W-2s (last 2 years)
• Tax returns (last 2 years, especially if self-employed)
• Bank statements (2-3 months)

Property:

• Current mortgage statement
• Property insurance declaration page
• HOA information (if applicable)

Pro tip: HonestCasa's soft credit check means you can see if you qualify before gathering all these documents. Check eligibility first, then collect paperwork once you know you're in the running.

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What Can Disqualify You?

Let's be honest about the deal-breakers:

But here's the thing: Many "disqualifiers" aren't absolute. A bankruptcy from 3 years ago with strong recovery might get approved by the right lender. Property title issues can often be resolved. High LTV might work if credit is excellent.

This is where working with experts who know multiple lenders—like HonestCasa's network of 200+ lenders—makes a difference.

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How to Improve Your Approval Chances

Before you apply, stack the deck in your favor:

1. Check your credit report for errors. Mistakes happen. Dispute inaccuracies at AnnualCreditReport.com (it's free).

2. Pay down credit card balances. Utilization under 30% boosts your score and lowers your DTI.

3. Don't open new credit. New accounts = hard inquiries + lower average account age. Bad timing.

4. Document everything. Self-employed? Get those tax returns and P&L statements ready.

5. Consider a co-borrower. A spouse or partner with strong credit/income can strengthen the application.

6. Shop multiple lenders. Requirements vary significantly. A "no" from one lender might be a "yes" from another—this is why HonestCasa matches you with options from 200+ lenders.

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HELOC vs Home Equity Loan vs Cash-Out Refi: Requirements Compared

Key insight: HELOCs often have slightly more flexible requirements than cash-out refinances—and they're much faster.

→ HELOC vs Home Equity Loan: Full comparison →

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Check Your HELOC Eligibility Now

Here's the best part: you can find out if you qualify without any commitment—and without hurting your credit.

Soft pull vs. hard pull:

• Soft pull: A preliminary check that doesn't affect your credit score. Used for pre-qualification.
• Hard pull: A full credit inquiry that may lower your score by a few points. Used for final approval.

HonestCasa uses a soft pull to show you what you might qualify for. If you like what you see, you move forward. If not, you walk away with your credit score intact.

→ See if you qualify in 2 minutes →

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Frequently Asked Questions

What credit score do I need for a HELOC?

Most lenders require a minimum of 620, but you'll get better rates at 700+. Some lenders work with scores as low as 580 if you have compensating factors like high equity (40%+) or very low debt-to-income ratios.

Can I get a HELOC with bad credit?

Possibly. If your credit is below 620, you may still qualify with a non-QM lender, a co-borrower, or by demonstrating strong equity and stable income. Expect higher interest rates.

How much equity do I need for a HELOC?

Typically 15-20% minimum. Most lenders cap combined loan-to-value at 80-85%. If your home is worth $400,000 and you owe $300,000, you have 25% equity and could borrow roughly $20,000-$40,000 depending on the lender.

Do I need an appraisal for a HELOC?

Usually, but some lenders use automated valuation models (AVMs) for faster approval without a traditional appraisal. HonestCasa often provides instant eligibility estimates without needing an appraisal upfront.

How long does HELOC approval take?

Traditional lenders: 2-6 weeks. With HonestCasa: as fast as 7 days from application to funding.