A home equity line of credit (HELOC) is a revolving credit line secured by your home equity. Your equity is the difference between what your home is worth and what’s remaining on the mortgage.
HELOCs can be an attractive way to tap into cash for debt consolidation, home improvements, or other expenses. You may access your equity within a few weeks and use the money for any purpose.
You’ll need several key pieces of information to apply for a HELOC. Knowing what documents are needed can help you prepare.
In this guide:
- What documents are needed to apply for a HELOC?
- Do certain situations require extra documents?
- How are the above documents submitted to the lender?
- What documents is the lender responsible for during the HELOC process?
- If I have a co-applicant, will the lender need the listed documents from both?
No documents needed to prequalify without impacting your credit
- 100% online application
- Borrow up to $400,000 and receive your funds in as little as 5 days
- All HELOCs come with a fixed rate
What documents are needed to apply for a HELOC?
The documents needed for HELOC applications are similar to what most lenders require when applying for a mortgage. Lenders ask for documents to verify your identity, income, assets, and property details.
Personal information documentation
The lender will first want to verify that you’re the person whose name is on the HELOC application. Expect to provide:
- Your name, date of birth, and Social Security number.
- Your current address (and previous address, depending on how long you’ve been in your current home).
- Your employer’s name and address.
- A valid copy of a government-issued photo ID, such as a driver’s license or state identification card.
The lender will use your name and Social Security number to obtain your credit reports, which it will need to approve your HELOC application. Your lender will ask for permission before it checks your credit.
Income and asset documentation
The next set of documents you’ll need for a HELOC application covers your income and assets. The lender uses this and your credit reports to determine your ability to repay what you borrow.
The documentation you’ll need to verify income can depend on whether you’re employed in a traditional job, self-employed, retired, disabled, or receiving domestic support payments.
The income documents you may need to apply for a HELOC include:
- Pay stubs for the previous 30 days.
- W-2 forms for the previous two years to verify earnings.
- Current-year profit-and-loss statement (if you’re self-employed).
- Tax returns for the previous two years (if you’re self-employed).
- Disability, Social Security, or pension income award letters. (You may also substitute bank statements or 1099s to show proof of these types of income.)
- Documentation of retirement account distributions, including award letters, bank statements, or tax forms.
- Alimony and child support documentation, which can include a divorce decree, divorce settlement document, court order, or bank statements showing deposits made to your account.
Lenders also consider certain assets to demonstrate your ability to pay. Asset documentation can include:
- Bank account statements for the previous two months.
- Investment and retirement account statements for the previous two months.
This may exclude assets you hold on another’s behalf. For example, if you have custodial bank accounts or 529 college savings accounts set up for your children, the lender may not need to see documentation of these.
The final piece of the puzzle is the home itself. The lender will want to know how much you owe on the mortgage, what the home is worth, and how much insurance you have.
Required documentation often includes:
- A copy of your homeowners insurance declarations page, which you can get from your insurer.
- A copy of your most recent property tax bill.
- Your most recent mortgage statement showing the balance due and escrowed amounts for homeowners insurance, property taxes, private mortgage insurance, or homeowners association fees.
- A copy of your flood insurance declaration if your property is in a flood zone.
Most of the time, you’ll also need an appraisal to apply for a HELOC. Once you submit your application, the lender will schedule the appraisal to determine the home’s value.
>>Read more: What is a HELOC subordination agreement?
Do certain situations require extra documents?
The documentation you’ll need for a HELOC depends on your situation. If you think special circumstances apply to you, it’s helpful to know whether a lender might request any extra documentation to process your application.
Here are several examples of when additional documents might be necessary.
Self-employment means you don’t draw a regular paycheck from an employer. As such, lenders may scrutinize your income to ensure you can repay a HELOC.
Instead of pay stubs or W-2s, your lender might ask for:
- Two years’ worth of personal and business tax returns.
- A copy of your profit-and-loss statement for the current year.
- A copy of your business balance sheet.
- Business and personal bank account statements.
- A brief personal statement that explains your financial status and ability to repay a HELOC.
Your lender may also request a letter of verification proving you’re self-employed. For instance, if you’re a freelancer, you may need to provide a letter from one or more clients attesting to your status as an independent contractor.
You’re retired or disabled
Retirement often means you replace your paychecks with pension income, retirement account distributions, Social Security benefits, or some combination of these. If you’re disabled, you might rely on Social Security disability benefits as your primary source of income.
In either case, you might need the following documents to apply for a HELOC:
- Tax returns for the previous two years.
- Social Security retirement benefits or disability benefits award letter.
- Pension award letter.
- Retirement or investment account statements.
- A copy of a lease agreement if you draw rental income from a property you own.
Your lender may permit you to substitute bank statements for other income documentation if you show recurring retirement or disability income deposits.
You live in a flood plain
Living in a flood zone can heighten risk when applying for a HELOC. Lenders may expect to see a declaration of flood insurance to approve you.
If you’re required to provide proof of flood insurance, you’ll provide your:
- Policy term
- Coverage amount
Your insurance company should be able to provide you with a declaration or send it to the lender on your behalf.
How are the above documents submitted to the lender?
The process for submitting documents needed for a HELOC can depend on what’s required and the lender.
You can apply for a HELOC one of three ways:
- By phone
- In person
If you’re applying online, the lender may allow you to upload and submit documents electronically. This can save time, and you may be able to get preapproved to check your rates.
However, you might be more comfortable applying for a HELOC over the phone or in person. In that case, the lender may ask you to provide original or duplicate hard copies or share a link to an online portal where you can submit documents.
What documents is the lender responsible for during the HELOC application process?
You don’t have to provide certain documents when applying for a HELOC. Instead, the lender collects these documents for you. Note that a fee might apply for that convenience.
The lender is responsible for documents including:
- Your credit reports: The lender uses these to gauge your creditworthiness. Once you consent, the lender pulls your credit reports from the major credit bureaus. You might see a credit report fee of $15 to $75 in your HELOC closing documents.
- The appraisal: An appraisal is necessary for a HELOC to determine what the home is worth. The lender will order the appraisal, and you’ll pay a fee. Appraisal fees total around $350 on average, depending on your location and home size.
Your closing paperwork should include a breakdown of the fees you’ll pay the lender and what they cover. Typical closing costs for a HELOC are 2% to 5% of the loan amount.
If I have a co-applicant, will the lender need the listed documents from both of us?
If you’re completing a joint HELOC application with a spouse or co-homeowner, you’ll both need to provide the required documentation.
These can include:
- Photo ID
- Social Security numbers and birthdates
- Employment information
- Pay stubs, W-2s, and tax returns
- Bank account statements
- Investment account statements
Lenders can look at both your credit histories and debt profiles, as well as your income and assets, when determining whether to approve you for a HELOC. Applying for a joint HELOC could allow you to qualify for a larger credit line if you both have good credit histories.
Find out more about how to apply for a HELOC.