HELOC loans for self-employed borrowers are available, but qualifying can be harder without a steady W-2 income. Lenders often require strong credit, enough home equity, and extra documentation like tax returns, bank statements, or profit-and-loss statements.
The good news is that many lenders now offer more flexible income verification options for freelancers, contractors, and business owners. Below, we’ll explain how HELOCs for self-employed borrowers work, what lenders look for, and the best lenders to consider.
Table of Contents
Are there HELOCs for self-employed borrowers?
You can get a home equity line of credit (HELOC) if you’re self-employed, but qualifying may be more difficult. Because self-employed income can fluctuate, lenders often require additional verification to confirm you can repay the loan.
Compared to traditional employees, self-employed borrowers may face:
- More income documentation requirements
- Higher minimum credit score expectations
- Stricter debt-to-income (DTI) requirements
- More home equity requirements
- Fewer lender options
- Higher rates or fees in some cases
Instead of W-2s and pay stubs, lenders may ask for tax returns, bank statements, profit-and-loss statements, or other business financial records.
Requirements for HELOCs for self-employed borrowers
To qualify for a HELOC as a self-employed borrower, lenders typically look for:
- At least 15% to 20% home equity
- An eligible property type, such as a primary residence, condo, or second home
- Consistent income history
- Tax returns, bank statements, or profit-and-loss statements
- A low debt-to-income (DTI) ratio
- Good to excellent credit (often 680+ or higher)
While some lenders advertise minimum credit scores as low as 620 to 670, self-employed borrowers usually have better approval odds with scores above 720.
If your income fluctuates significantly, consider lenders that allow alternative income verification methods, such as bank statement underwriting instead of traditional W-2 documentation.
“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.”
– Eric Kirste, CFP®, CIMA®, AIF®
Best HELOCs for self-employed borrowers
Check out our reviews of the best lenders offering home equity financing solutions for self-employed borrowers.
Figure
Why we picked it
Figure works with self-employed borrowers who can verify their income with tax returns and bank statements, and is more likely to approve applicants with a credit score of 720 or higher.
You may need to provide bank statements from the last two to four months. If Figure’s team sees abnormalities, it might request additional information to understand why your income dropped.
If you apply and qualify, you can get initial approval within minutes and, pending verification, access your line of credit in a matter of days. Figure lists business financing as one of the ways you can use your funds, so it’s an option if you want to invest in your business using some of your home equity.
- Fast approval and funding (as little as 5 days)
- Accepts bank statements for income verification
- Online application
- Accepts bank statements for income verification
- Origination fee up to 4.99%
- Must draw full line of credit (minus fees) at closing
- Not available in Hawaii
Read our full Figure HELOC review.
| Rates (APR) | 8.35% – 16.55%ⓘ |
| Funding amount | $15,000 – $400,000 |
| Repayment terms | Draw: 2 – 5 years / Repayment: 5, 10, 15, or 30 years |
| Min. credit score | 640 |
Aven
Why we picked it
Aven’s HELOC is a standout choice for self-employed borrowers who may struggle with traditional income verification methods but can demonstrate consistent income and a credit score of 720 or higher.
It offers a tech-driven application process that allows self-employed individuals to verify their income with bank statements or by connecting their accounts directly, making the approval process much smoother for those without W-2s or conventional employment documentation.
The fully digital experience, from application to signing, is ideal for busy entrepreneurs or freelancers. Aven’s system ensures you can get preapproved in minutes and receive your HELOC funding within three days of signing, minimizing disruption to your schedule.
- Income verification options suited for self-employed borrowers
- Fully digital application and approval process
- Fixed interest rates from the start
- High loan-to-value ratio (up to 89%)
- Must draw the full loan amount at origination
- Short (5-year) draw period
- Only available in 32 states*
Read our full Aven HELOC review.
| Rates (APR) | 6.99% – 15.49% |
| Loan amounts | $5,000 – $400,000 ($100,000) |
| Repayment terms | Draw: 5 years / Repayment: 5, 10, 15, or 30 years |
| Min. credit score | 640 |
| Funding time | As little as 3 days after signing |
FourLeaf
Why we picked it
FourLeaf Federal Credit Union (formerly Bethpage) stands out for its fixed-rate HELOC conversion option and minimal fees. You must join the credit union to apply, but you can become a FourLeaf member by opening a savings account and depositing $5. FourLeaf asks self-employed borrowers to provide their two most recent bank statements and two most recent tax returns to apply.
FourLeaf 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.
- No closing costs
- No application, appraisal, or origination fees
- Convert some or all of your HELOC to a fixed-rate loan
- 35-day funding is slower than other options
- Must join the credit union to apply
Read our full Fourleaf Credit Union review.
| Rates (APR) | 6.99% fixed for 12 months for qualified borrowers, then variable starting at 6.75%ⓘ |
| Loan amounts | $10,000 – $1 million |
| Repayment terms | 10-year draw / 20-year repayment |
| Min. credit score | 670 |
What is considered self-employed on a HELOC application?
For HELOC purposes, you’re generally considered self-employed if you earn 1099 income instead of a W-2 paycheck. This includes freelancers, independent contractors, gig workers, consultants, and business owners.
Lenders also typically consider you self-employed if your business is structured as a:
- Sole proprietorship
- LLC
- Partnership
- S-corporation or C-corporation
What if you have both W-2 and 1099 income?
If you earn both W-2 and self-employment income, ask whether you can qualify using only your W-2 income. This can simplify the approval process because the lender may not need additional business documentation.
What if your spouse has a W-2 job?
If your spouse has traditional employment income, you may be able to qualify for a HELOC using only their income. In some states, married couples can apply with one spouse as the sole borrower, though rules vary by state and lender.
How to apply for a HELOC if you’re self-employed
1. Check your qualifications
Review your credit score, home equity, income history, and debt-to-income ratio before applying. Most lenders prefer strong credit and at least 15% to 20% equity.
2. Compare HELOC lenders
Look for lenders that work with self-employed borrowers or offer alternative income verification, such as bank statement HELOCs.
3. Gather your documents
Lenders may ask for the following documents:
- Tax returns
- Bank statements
- Profit-and-loss statements
- Business financial records
4. Get prequalified
Prequalification can help you compare rates, fees, and borrowing limits without committing to a lender.
5. Submit your application
Once approved, the lender may require a home appraisal and final income verification before funding your HELOC.
“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.”
– Eric Kirste, CFP®, CIMA®, AIF®
Alternatives to HELOCs for the 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
Home equity loan vs.HELOC loan for self-employed borrowers
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 |
What disqualifies you from getting a HELOC if you’re self-employed?
Self-employed borrowers can qualify for both HELOCs and home equity loans, and the qualification requirements are usually very similar. Lenders typically look at your home equity, credit score, debt-to-income ratio, and ability to verify consistent income through tax returns or bank statements.
In some cases, home equity loans may be slightly easier to qualify for because they have fixed rates and predictable monthly payments. However, the best option depends more on how you plan to use the funds. Home equity loans work best for one-time expenses, while HELOCs are better for ongoing or flexible borrowing needs.
Can you get a home equity loan without a job?
Yes, it’s possible to get a home equity loan without a traditional job, but you still need to show a lender that you have reliable income or assets to repay the loan. Lenders may accept income from self-employment, retirement accounts, Social Security, investments, rental properties, or a spouse’s income.
You’ll also typically need sufficient home equity, good credit, and a manageable debt-to-income ratio. Some lenders offer bank statement loans or alternative income verification options for borrowers without W-2 employment.
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.
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About our contributors
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Written by Timothy Moore, CFEI®Timothy Moore is a Certified Financial Education Instructor (CFEI®) specializing in bank accounts, student loans, taxes, and insurance. His passion is helping readers navigate life on a tight budget.
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Edited by Amanda HankelAmanda Hankel is a managing editor at LendEDU. She has more than seven years of experience covering various finance-related topics and has worked for more than 15 years overall in writing, editing, and publishing.
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Reviewed by Eric Kirste, CFP®Eric Kirste, CFP®, CIMA®, AIF®, is a founding principal wealth manager for Savvy Wealth. Eric brings more than two decades of wealth management experience working with clients, families, and their businesses, and serving in different leadership capacities.