Best Home Equity Loans and HELOCs for Self-Employed

If you’re self-employed, you might think home equity loans and lines of credit (HELOCs) are out of reach. After all, applying requires a credit check and income verification, and inconsistent paychecks can impact your approval odds.

Thankfully, qualifying for home equity financing is possible. Check out our picks for the best home equity lenders for self-employed individuals.

Reviews of the best home equity loans for self-employed

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

Figure: Best overall HELOC

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LendEDU rating: 4.9 out of 5

• Funding in as little as 5 days
• Repayment periods from 5 to 30 years
• Not available in New York

Figure works with self-employed borrowers who can verify their income with tax returns and bank statements. If you apply and qualify, get initial approval within minutes and—pending verification—access your line of credit in a matter of days. 

You don’t need to step into a bank to work with Figure. The entire process happens online, complete with an online notary. Depending on your comfort with technology, this could be a pro or a con. 

Figure lends up to $400,000 and doesn’t charge late fees, prepayment fees, or annual fees—but the lender deducts an origination fee of up to 4.99% from your credit line. Figure also requires a 100% initial draw, so you’ll have to max out your credit line at the time of funding.

Hitch: Best HELOC for fast funding

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LendEDU rating: 4.4 out of 5

• Funding within 21 days
• 30-year repayment period
• Only available in Colorado, Florida, Oregon, Utah, and Washington, D.C.

Hitch is currently available in just a handful of states, but this lender boasts a convenient online application process and lightning-speed approvals. The application itself takes most borrowers around five minutes, and you’ll know whether you’re prequalified almost immediately.

Funding times are a little slower than other lenders, however. You’ll wait an average of three weeks to gain access to your credit line. Like Figure, Hitch requires a 100% initial draw; every subsequent draw must be at least $500.

On the plus side, Hitch doesn’t turn away self-employed homeowners. You can apply as long as you’ve got the paperwork to prove your income. Origination fees are low, too: Hitch only charges a 2% fee for its HELOCs.

Bethpage: Best credit union

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LendEDU rating: 4.2 out of 5

• 35-day funding
• 10-year draw, 20-year repayment
• No closing costs or fees

Bethpage Federal Credit Union stands out for its fixed-rate HELOC conversion option and minimal fees. Bethpage doesn’t charge application, appraisal, or origination fees. And as long as you keep your HELOC open for at least 36 months, you won’t pay closing costs, either.

You must join the credit union to apply, but you can become a Bethpage member by opening a savings account and depositing $5. Like PenFed, Bethpage asks self-employed borrowers to provide their two most recent bank statements and two most recent tax returns to apply.

To qualify for the best rates on a standard variable-rate HELOC, you must make a $25,000 initial draw, have a combined loan-to-value (CLTV) of 65% or less, and set up automatic payments from a Bethpage bank account.

LendingTree: Best HELOC marketplace

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LendEDU rating: 4.7 out of 5

• Compare several home equity loan or HELOC offers in one place
• No impact on your credit
• Borrow up to $2 million for a HELOC

LendingTree is an online lending marketplace. Unlike other companies on our list, LendingTree won’t service your HELOC or home equity loan directly. Instead, you’ll use the LendingTree matching tool to check rates with multiple lenders at once.

You’ll tell LendingTree your zip code, property value, mortgage balance, and estimated credit score to get started. LendingTree will then present you with lenders it thinks are a good fit. If you see an offer you like, you can submit a full application with that lender. 

As you review your offers, compare each one carefully. While LendingTree is free to use, each lender may assess its fees. Some impose minimum draw requirements or have less flexible repayment terms, so research before applying.

Best home equity loans or HELOCs for self-employed borrowers

Before researching lenders, decide how you want to tap into your home equity. Home equity loans and HELOCs both give you increased purchasing power, but they do so in different ways:

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

Home equity loans are beneficial if you need to access a large amount at once, but HELOCs provide more flexibility. 

If your income fluctuates from month to month, weigh the benefit of a stable home equity loan payment against the ability to adjust how much you borrow from a HELOC (and thus, how much you have to repay).

Once you know which home equity product works best with your finances, you’re better equipped to find your ideal lender.

How to choose the best home equity loan or HELOC

HELOCs and home equity loans can be solid options to borrow against your home equity. HELOCs can make more sense if you have variable expenses, and home equity loans offer access to a large lump sum. Repayment is often a fixed amount over a specified time.

If your self-employment income is variable, you might feel more secure with the flexibility of a HELOC. 

Once you decide on a product, shop around for a lender. Lenders and products will vary in many ways, including: 

• Interest rates
• Fee structures
• Processing times
• Loan terms
• Potential discounts

It pays to research and find a lender you want to work with. Before choosing a lender, check customer reviews to ensure it will meet your needs.

After settling on a lender, you’ll gather your information for your application. This often includes personal information, financial information, and your home’s estimated value. After the lender reviews your application, you’ll provide verification documents such as bank statements and tax transcripts. 

Then you’ll need to get your home appraised (your lender will arrange this), and it will complete a “hard” credit check.

Check out our research on the best home equity loans and best HELOCs.

How to apply for a home equity loan or HELOC if you’re self-employed 

Getting a HELOC or home equity loan when you’re self-employed requires more extensive documentation, but it’s not impossible. 

Like a traditionally employed borrower, you’ll need to prove you meet your lender’s HELOC requirements and have the means to take on and repay new debt. To do so, you’ll provide a combination of the following:

• Recent bank statements (at least several months’ worth)
• Business and personal tax returns for the past two years
• A statement from your accountant verifying your business’s health
• Business formation documents and proof of ownership

Your lender will let you know if they need additional income information during the application process. Be prepared to submit homeownership and property insurance records, as well. 

Aside from differences in the paperwork involved, the home equity financing application process is the same for self-employed and traditionally employed borrowers. Here’s what to expect:

1. Research and prequalify with different lenders. Prioritize lenders with features that make sense for your forecasted budget, like lower starting APRs, flexible repayment terms, or hardship assistance.
2. Submit a full application after checking rates with four to five lenders. Wait to consent to a hard credit pull until you’ve compared rates and know where you’ll get the best deal.
3. Enter your personal and business information. You’ll share information like your name and Social Security number, as well as your business tax ID (unless you operate as a sole proprietor) and monthly or annual revenue.
4. Upload your financial documents. Reporting your income isn’t enough. Your lender needs proof via the above mentioned methods that your earnings are stable and sufficient.
5. Wait for a decision from your lender. Once your lender reviews your application and supporting documentation, it’ll let you know if you’ve been approved. If your application is denied, you should get a letter stating why.
6. Sign your financing agreement. If approved, your lender will send you a document outlining your repayment terms, anticipated monthly payments, and interest rate. Review this document carefully, and if you’re happy with the loan offer, sign to accept.
7. Receive your funds. Depending on whether you opted for a home equity loan or a HELOC, you’ll either see a sizable deposit in your bank account or be given instructions for how to withdraw from your credit line.

Approval and funding timelines vary by lender. Getting a home equity loan or HELOC isn’t as quick as getting a credit card. Anticipate the process to take anywhere from a couple of weeks to a couple of months from when you apply to when you can access your funds.

Alternatives to HELOC or home equity loan for a self-employed borrower

If you’re concerned about your chances of approval—or if you applied for a loan and were denied—you may be able to secure funding with these HELOC alternatives:

Alternative	Pro	Con
Cash-out refinance	Could lower mortgage payment	Extends your mortgage term
Home equity sharing agreement	No income requirements	Could be more expensive
Home-sale leaseback	Access larger amount of money	No longer own your home
SBA loans	Multiple loan types	Strict usage requirements

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 a home equity loan or HELOC.

Home equity sharing agreement

A home equity sharing agreement, or home equity investment, gives an investment company a portion of your equity in exchange for a lump sum. 

Unlike HELOCs and home equity loans, a home equity shared agreement isn’t a form of debt, so it can be easier to qualify. 

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.