How to Get a HELOC If You’re Self-Employed

Being self-employed doesn’t mean you’re ineligible for a home equity line of credit (HELOC); it just means the road to financing might be more challenging. Because your income may fluctuate, lenders might mark you as a higher risk. (A steady paycheck can help them gauge whether you’ll have enough money to make your monthly loan repayment.)

Below, I’ll explore what steps you’ll need to take to get a HELOC, plus some of the best HELOC lenders for your needs.

Table of Contents

1. Can you get a HELOC if you’re self-employed?
2. Are you considered self-employed?
   1. What if you do contract work on the side?
   2. What if your spouse is an employee?
   3. Eligibility criteria for self-employed borrowers
3. How to get a HELOC if you’re self-employed
4. Best HELOCs for self-employed borrowers
5. Alternatives to HELOCs
6. FAQ
   1. What disqualifies you from getting a HELOC if you’re self-employed?
   2. Can I get a HELOC without showing income?

Can you get a HELOC if you’re self-employed?

Yes, you can get a HELOC if you’re self-employed. However, because lenders traditionally look at your paycheck and W-2s to determine your income (and thus your ability to repay a loan), you may have a harder time qualifying.

Specifically, the loan underwriting process may be more complicated, you might have fewer options for lenders, and you could contend with higher fees and rates.

How to know if you’re considered self-employed

The easiest way to determine whether you’re self-employed is to look at how you file taxes. If you receive a W-2 from a company, you’re considered an employee. However, if you receive 1099s for services you provide to one or more clients, you’re considered an independent contractor.

You may be an independent contractor if you own your own business (like if you’re a plumber or landscaper), if you participate in the gig economy (such as driving for a rideshare company or delivering food), or if you’re a consultant or freelancer.

For loan purposes, you’d be considered self-employed if you’re structured as:

• A sole proprietorship
• An LLC
• A partnership
• An S- or C-corporation

If you’re unsure how you’re classified, speak with your accountant or financial advisor before applying for a HELOC.

What if you do contract work on the side?

According to a 2025 LendingTree survey, 2 in 5 Americans have a side hustle on top of their full-time gig. That means they likely earn a paycheck from an employer (W-2 income) and do gig work (1099 income). These people are both employees and self-employed.

So what does that mean for getting a HELOC? If you have both W-2 and 1099 income, ask the lender whether you’d qualify for the loan with only your W-2 income. If you earn enough, the lender may not need to consider the money you make on the side, which makes the application process much easier.

What if your spouse is an employee?

If you and your spouse own your home together, and your spouse has a traditional W-2 job, you may be able to get a HELOC in their name only. This assumes their salary alone is enough to qualify for the home equity line of credit.

Many married couples are surprised to learn that you can, in certain states, apply for a HELOC without your spouse. It depends on your state’s marriage laws and whether your state has equal or equitable distribution—and you often still need the non-borrowing spouse’s consent.

If your spouse makes good money and you rely on self-employment income, look into whether this is possible in your state.

Eligibility criteria for self-employed borrowers

For home equity loans and HELOCs, lenders generally require:

1. Sufficient home equity: Most lenders require you to have at least 15% equity in your home.
2. Proof of income: Self-employed borrowers need to provide additional documentation, such as two years of tax returns, profit and loss statements, and bank statements, to verify their income. 
3. Good credit score: Home equity loan and line of credit lenders often cite a minimum required FICO credit score of 640 to 670. However, we’ve observed that they almost exclusively approve applicants with scores of 720 or higher, and they may require a higher score for self-employed applicants.

For self-employed individuals who have large swings in income, it becomes difficult using traditional lenders. In my experience, using lenders that have alternative ways to review their ability to pay back outstanding balances will work best.

If you’re a self-employed homeowner, be prepared to demonstrate consistent income over a few years and maintain strong financial records to improve your chances of qualifying. Some lenders may be more flexible with self-employed borrowers, so it can help to shop around and compare options.

HELOC vs. home equity loan for self-employed

We’ve been primarily discussing how to get a HELOC if you’re self-employed, but it’s important to note the same challenges exist for both HELOCs and home equity loans.

Regardless of which way you plan to tap into your home equity—lump sum (home equity loan) or revolving line of credit (HELOC)—you’ll be up against tougher criteria without a W-2, but qualifying is not impossible.

Which loan is right for you?

• Home equity loan: I recommend a home equity loan if you’re funding a single project with a known upfront cost, or if you’re making a lump-sum payment toward high-interest debt, like credit card debt. (Yes, you can use a home equity loan to pay off credit card debt!)
• Home equity line of credit: HELOCs are better suited if you have a long-term project with ongoing costs, like a major home renovation. It’s also helpful if you have ongoing medical expenses during treatment for a condition.

The table below breaks down the core components of each loan type further:

Home equity loan	HELOC
Lump-sum payment	Revolving credit line
Consistent, immediate monthly payments	Divided into draw period and repayment period
Usually fixed rates	Usually variable rates

How to get a home equity line of credit if you’re self-employed

The steps to get a HELOC as a self-employed person are similar to those you’d follow as a traditional employee; you just may need more documentation (and be prepared for higher rates and fees).

1. Review your finances

Before applying for a HELOC, ensure you’re eligible by reviewing your:

• Credit score: It varies by lender, but in general, the credit score needed for home equity loans is 620.
• Equity: To qualify for a HELOC, you’ll need enough equity in your home. While the amount of equity required for a HELOC varies by lender, you’ll typically need between 15% and 20%.
• Net income and cash flow: Review your finances to determine how much, on average, you make each month, after business expenses. Also subtract your living expenses and other debts. Is there enough left over to afford a monthly HELOC payment?

We suggest that self-employed individuals keep organized records on accounts payable and receivable. There may be clients who pay erratically or provide future income opportunities. Showing that the clientele pays on irregular schedules to alternative lenders will help with the due diligence process.

2. Research lenders

Your best bet as an independent contractor is to compare the best no-doc HELOCs. As the name implies, these lenders don’t look at traditional documentation, such as W-2s and pay stubs. Instead, they may look at bank statements and your assets.

Below, I’ll explore the best HELOCs for self-employed individuals, including Figure, Aven, and FourLeaf, but some self-employed borrowers have also had luck with Griffin Funding, Excel Federal Credit Union, and Truss Financial Group.

3. Make a plan for borrowing and repayment

To avoid over-borrowing, determine how much money you’ll withdraw during the draw period, and don’t borrow a cent more.

As a freelancer myself, I know how much income can fluctuate depending on the time of year or changing needs of clients, so I advise having at least two months’ worth of payments set aside as part of your emergency fund. Save this before applying (in a high-yield savings account).

This means even if you make no money for a couple of months, you won’t fall behind on payments. And trust me, when your house serves as collateral on a loan, you do not want to fall behind.

4. Get prequalified

With your shortlist of lenders, get prequalified, if possible. This will give you a better idea of the rates and fees you’ll pay at each lender.

While I often advise borrowers to choose the option that’s cheapest in the long term, for contractors with fluctuating income, I often instead recommend the option with the lowest monthly payment, even if it costs more in the long run.

5. Gather your documents

Because you can’t supply W-2s and pay stubs as a solely self-employed borrower, the lender will likely require some or all of the following with your application:

• Recent bank statements
• Profit-and-loss statements
• 2 most recent tax returns
• Details of all your assets

Best HELOCs for self-employed borrowers

Check out our reviews of the best lenders offering home equity financing solutions for self-employed borrowers.

Alternatives to HELOCs for self-employed

If you’re not sure you’ll be able to qualify for a HELOC or home equity loan as a self-employed individual, or if you’ve applied and been denied, other options may be available.

Personal loans

Personal loans can be easier to qualify for, whether you have a lower credit score or “less stable” income as a freelancer or contractor. However, personal loan interest rates can go up to 36% and average between 11.30% (excellent credit) and 25.20% (poor credit). This makes them more expensive than HELOCs.

Cash-out refinance

A cash-out refinance gives you quick access to more cash by replacing your mortgage with a bigger one. You’ll repay a new, larger mortgage in exchange for more money in your pocket. You can often find a lower interest rate with a cash-out refinance than with a home equity loan or HELOC.

Home equity agreement

A home equity agreement gives an investment company a portion of your equity in exchange for a lump sum. Unlike HELOCs and home equity loans, a home equity agreement isn’t a form of debt, so it can be easier to qualify. 

Portfolio-based line of credit

One of the reasons people turn to HELOCs is because their cash is tied up in their property. But it’s possible you might also have cash tied up in investments—and some lenders allow you to borrow against those.

Such loans are called portfolio-based lines of credit, or margin loans. You can borrow against retirement accounts, such as your IRA, or brokerage accounts. Rates are usually variable.

These loans carry some major risks, such as margin calls (if the value of your portfolio falls, the amount you can borrow falls—and the lender will require you to settle up immediately so that you’re not borrowing more than permitted). Though risky, they’re a great way to use money you have tied up in investments, without actually pulling those investments, meaning they can continue to grow as planned.

Home sale-leaseback

A home sale-leaseback transaction involves a property owner selling their home and then leasing or renting it from the new owner. This option gives those struggling to qualify for a loan access to immediate cash without moving out of their home.

SBA loan

The Small Business Administration (SBA) offers several financing options for entrepreneurs, including 7(a) loans, 504 loans, and microloans. SBA loans come with specific usage and eligibility requirements, but if you qualify, these business loans can increase your working capital without using your house as collateral.

Credit cards

Credit cards should be a last resort, especially when spending large amounts. I only recommend credit cards to people who can pay them off in full each month and take advantage of rewards programs.

That said, in true emergency situations, wherein you can’t borrow from friends or family and all other loan products are off the table, credit cards might be the answer. If a credit card makes the difference between food on the table or not, use the credit card, but make a plan to quickly pay off that debt.

FAQ

What disqualifies you from getting a HELOC if you’re self-employed?

If you’re self-employed, a low credit score, insufficient income documentation, high DTI, or low home equity can disqualify you from getting a HELOC. An unstable financial history, such as inconsistent income or irregular tax filings, may also raise concerns for lenders.

To qualify, you generally need a credit score of at least 720, sufficient proof of consistent income, a DTI below 43%, and at least 15% equity in your home. Meeting these requirements increases your chances of approval.

Can I get a HELOC without showing income?

It’s unlikely to get a home equity loan without showing any income, especially if you’re self-employed. Lenders typically require proof of income through tax returns, bank statements, or business profit and loss statements to ensure you can repay the loan. But you can check out our resource on no-doc HELOCs for more. As you’ll see, these lenders still require certain information, such as bank statements.

How we selected the best HELOCs for self-employed individuals

Since 2018, LendEDU has evaluated home equity companies to help readers find the best home equity loans and HELOCs. Our latest analysis reviewed 850 data points from 34 lenders and financial institutions, with 25 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.