The Quick Read: No single deposit number applies to every business owner, because a bank statement HELOC turns cleaned deposits into qualifying income and then tests that income against a debt-to-income limit, so the deposits you need scale with the line size, your existing debts, the lender’s expense factor, and your ownership share. The way to find your number is to work backward from the line you want. The worksheet below shows how, using index units instead of dollars so the logic carries to any file.
- Deposits are cleaned first. Transfers between your own accounts, loan proceeds, refunds, and one-time credits come out before anything is averaged.
- Business-account deposits are usually discounted by an expense factor. Personal-account deposits are usually counted near face value when they are identifiable as business income.
- A 50% factor means a business account needs roughly twice the gross deposits that a personal account needs for the same qualifying income.
- The income is tested against the payment on the full line, not on the amount you plan to draw.
- On the investment property lines in Lendmire’s wholesale network, the ceiling is 70% CLTV, so the income test is only one of several gates.
Key Terms Defined
Bank statement HELOC: a home equity line where qualifying income comes from deposits on your bank statements instead of tax-return income, subject to lender guidelines.
Eligible deposits: the deposits left after the lender removes transfers, loan proceeds, refunds, and one-off windfalls.
Expense factor: the percentage the lender subtracts from business deposits to account for overhead; the lender sets it, not the borrower.
Qualifying income: the monthly figure the lender uses after averaging eligible deposits, applying the expense factor, and applying your ownership share.
Debt-to-income (DTI) ratio: your monthly debts, including the new line payment, divided by qualifying income.
Ownership share: your percentage of the business; a 60% owner is credited with 60% of the income.
CLTV: combined loan-to-value, which adds the new line to the balance of the first mortgage and divides by the property value.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
What a Bank Statement HELOC Is, and Why It Exists
A bank statement HELOC fits the owner whose tax return looks smaller than the business really is. Write-offs, depreciation, and reinvestment lower taxable income, and a lender reading only the return sees the lower number. Trade coverage of the non-QM market, such as Scotsman Guide’s overview of non-QM lending, frames these alternative-documentation products around self-employed borrowers whose documents do not fit a standard box.
The file is still fully underwritten. The borrower is reviewed on documented income under the applicable program, subject to lender guidelines. The statements replace the tax-return income test. Credit, CLTV, property type, and title are all reviewed as usual.
Programs on these files commonly review 12 or 24 months of statements, personal, business, or both. Run both windows before you apply. A growing business usually looks better on 12 months, and a business with a recent dip may look better on 24.
How the Lender Turns Deposits Into Qualifying Income
The deposit formula is a practitioner convention, not a government formula. In words: qualifying monthly income equals eligible deposits divided by the months reviewed, times one minus the expense factor, times your ownership share.
Here is the sequence a processor follows.
1. The lender pulls the statement window, 12 or 24 months, in personal accounts, business accounts, or both.
2. It screens out transfers between your own accounts, loan proceeds, refunds, and one-off windfalls. Only recurring, earned revenue stays.
3. It averages the clean total over the months in the window.
4. It applies the expense factor to business-account deposits. A program may accept a third-party-prepared profit-and-loss statement or a CPA letter in place of a flat factor, but the lender decides whether to accept it.
5. It applies your ownership percentage.
6. It runs the DTI test on the payment for the full line, as covered below.
7. It reviews credit, CLTV, property, and title the way it would on any equity line.
The waterfall below shows how gross deposits shrink. The numbers are index units, not dollars, and they are modeled assumptions for illustration only.
| Step | Business account | Personal account |
|---|---|---|
| Gross monthly deposits | 100 | 100 |
| Less transfers, loan proceeds, refunds | −22 | −22 |
| Eligible deposits | 78 | 78 |
| Expense factor (modeled at 50%) | −39 | none or minimal |
| Qualifying monthly income | 39 | about 78 |
The personal-account column assumes the deposits are identifiable as business income. If the picture is unclear, the lender may ask for a CPA letter or a profit-and-loss statement before it counts them at face value.
Working Backward: How Much Do You Need?
The reverse calculation is where most owners get stuck, because the lender’s DTI test sets the real ceiling. Start with the monthly debts you carry and add the payment on the new line. Divide by the maximum DTI, then gross the result up for the expense factor and your ownership share.
In words: required monthly deposits equal your monthly debts, including the new line payment, divided by the maximum DTI, divided by one minus the expense factor, divided by your ownership share.
In the network’s HELOC program, DTI tops out at 50%. It is limited to 45% for credit profiles from 600 to 679, and a ratio above 45% requires a 680 minimum. The payment is calculated on the interest-only payment on the maximum draw. A line you plan to tap lightly still counts at full size against your income.
Use this worksheet. The example column uses modeled index units.
| Step | What goes in | Example (index) |
|---|---|---|
| 1. Monthly debts plus new line payment | Your total | 45 |
| 2. Maximum DTI | 50% (45% at 600–679 credit) | 50% |
| 3. Income needed (step 1 ÷ step 2) | Result | 90 |
| 4. Expense factor | Lender-set | 50% |
| 5. Deposits needed (step 3 ÷ 1 − step 4) | Result | 180 |
| 6. Ownership share | Your percentage | 100% |
| 7. Total eligible deposits needed (step 5 ÷ step 6) | Result | 180 |
Change one input and the answer moves. At a 45% DTI limit, the same example needs 200. At a 60% ownership share, the 180 becomes 300. If a lender accepts a documented 35% factor in place of 50%, the 90 of income needed requires about 138 in deposits.
This is the check to run before you apply. If your eligible deposits sit well below the step 7 figure, a smaller line or paying down other debts may fix the file faster than any documentation change.
Same Deposits, Different Outcomes
Two owners with identical statements can land far apart. The table below holds eligible monthly deposits near 100 index units and changes one fact each time.
| Scenario | Eligible deposits | Factor and share | Qualifying income |
|---|---|---|---|
| Sole owner, business account | 100 | 50%, 100% | 50 |
| 50/50 partner | 100 | 50%, 50% | 25 |
| Seasonal, strong 12 months | 100 | 50%, 100% | 50 |
| Seasonal, weaker 24-month average | 90 | 50%, 100% | 45 |
| CPA letter accepted | 100 | 35%, 100% | 65 |
The last row shows why documented overhead matters. Moving from a 50% factor to a documented 35% factor lifts counted income by about 30% on identical deposits (65 ÷ 50). That is arithmetic, not a program promise, and the lender decides whether the letter is accepted.
Business Account or Personal Account?
Account type changes the math more than the length of the statement window. The rule of thumb is simple: submit the account that actually holds the business revenue, and know what each path costs.
| Factor | Business account | Personal account |
|---|---|---|
| Expense factor | Usually applied | Usually none or minimal |
| Main risk | Lower counted income | Deposits not identifiable as business income |
| Commingled activity | Often treated as business | Often treated as business |
| Extra documents | CPA letter may lower the factor | CPA letter or P&L may be requested |
One account carrying both personal and business activity is usually treated as a business account, and the factor applies to the whole thing. Keeping business revenue in its own account before you apply is a documentation habit that pays off here.
What Shrinks Your Eligible Deposits
Deposit quality matters as much as deposit volume. These items cause the most trouble on files.
- Transfers between your own accounts. Moving money from savings to checking looks like a deposit but is not revenue.
- Owner contributions. Cash you put into the business is not earned income.
- Loan proceeds. A business line draw or a personal loan landing in the account is removed.
- Refunds and reimbursements. These offset an expense and are not recurring revenue.
- Round-number or unexplained credits. Expect a letter of explanation, and if it is not convincing, the deposit comes out.
- Overdrafts and returned items. These do not remove income, but they invite a closer look at consistency.
Owner draws deserve a mention. A draw is money leaving the business account for you, so it comes out of the same deposits already being counted. Adding it on top would count the same money twice.
The Income Test Is Only One of Four Tests
Clearing the income test does not clear the file. The line still has to fit the leverage, credit, and property rules, and those depend on how you use the property. Ceilings are tiered by occupancy in this network.
| Occupancy | Top CLTV | Credit | Max line |
|---|---|---|---|
| Primary residence | 90% only at 720+ | 600 minimum | Up to $500,000 at that tier |
| Second home | 90% only at 720+ | 640 minimum | $500,000 |
| Investment property | 70% | 700 minimum | $500,000 |
If market surveys report higher CLTV figures for equity lines generally, those describe the broader market. The figures above are the network’s, and every one is subject to lender guidelines and full file review.
Three structural points matter for investors. First, the line can sit in first or second lien position, and an existing low-balance first mortgage stays in place, so the combined balance is what counts. Second, at least 75% of the line is drawn at closing, which means a large line shrinks your DTI room whether you need the cash right away or not. Third, lines of $500,000 or less ordinarily run on an automated valuation with no traditional appraisal, though a higher CLTV may call for a secondary valuation.
Title is the sharpest structural limit. Title must be held by the individual borrower or a revocable living trust. An LLC, corporation, or partnership cannot hold title. A rental already deeded to an LLC needs a vesting change or a different route, discussed below.
Availability is narrower than the DSCR footprint. The HELOC product is arranged only in Lendmire’s 16 full-service states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. Texas, New Mexico, Ohio, and a few other states carry their own overlays, so a file in those states gets its own review.
Where the General Rule Breaks
The formula works for a steady business with clean statements. These are the cases where it bends.
Falling deposits. Underwriters run trend checks on both windows. A decline can trigger a letter of explanation or a shorter lookback, which hurts when your best months are older.
Rising deposits. A recent jump helps on a 12-month window but does not count until it appears in the statements. The method looks backward at deposits that actually landed. Projected revenue from a second location or a new contract does not count.
New businesses. A business without a full statement window has little to average, and the file may not fit the program.
Tax-return losses. A loss makes the tax-return path unusable. This is the situation where the deposit path helps most, though the expense factor still applies.
Pass-through entities. S-corp distributions may count if they land as deposits in an account the lender can verify.
The documentation backstop. The CFPB’s Ability-to-Repay and QM compliance guide says income a creditor relies on must be verified with reasonably reliable third-party records. It recognizes self-employment and gives the example of an accountant-prepared profit-and-loss statement. That is why CPA letters carry weight and why undocumented deposits do not.
When the Rental Should Carry the Loan Instead
A bank statement HELOC tests your deposits and your DTI. A DSCR loan tests the property’s rent against its payment. For an investor pulling equity from a rental, they are alternatives, and the choice often comes down to whose income is stronger and who holds title.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Lendmire arranges them as a broker through select lenders in its wholesale network, across 41 markets, including Washington, D.C.
Several points make the DSCR path worth comparing for a rental:
- A cash-out refinance tops out around 75% LTV for a standard rental across most of the network, with about 6 months of seasoning as the common expectation.
- Coverage of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
- Credit floors vary by scenario in parts of the network. Most programs want around 660, and 700 or better unlocks the strongest leverage tiers.
- Reserves vary by lender, leverage, loan size, and transaction type. Around 6 months of PITIA is common.
- Rental property held in an LLC can work, subject to lender program eligibility, which is the main reason an LLC owner looks here instead of at a HELOC.
DSCR compares rent to PITIA only. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, utilities, and capex sit outside the calculation. The strongest files are the ones that pass both tests: enough equity and enough rental coverage.
For the full picture, see the complete DSCR loans guide. For line sizing on the HELOC side, Lendmire’s piece on how much a bank statement HELOC lends a business owner covers that question.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Pre-Application Checklist
- Pull 12 and 24 months of statements and compute the average of each.
- Mark transfers, loan proceeds, refunds, and owner contributions, and subtract them yourself first.
- Separate business revenue from personal activity before you apply, if you can.
- Ask your CPA whether a profit-and-loss statement or letter is available, understanding that the lender decides whether to use it.
- Total your monthly debts and run the worksheet for the line you want.
- Confirm title is in your name or a revocable trust, not an LLC.
- Check your credit tier against the CLTV ceiling for the occupancy of the property.
Next Step
If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Where the rental itself is the stronger story, the same conversation can cover a DSCR cash-out, subject to lender guidelines and not a commitment to lend.
Frequently Asked Questions
Can I add my owner draws or salary on top of my deposits?
No. Draws and salary are paid out of the same account the lender is already averaging, so counting them again would double-count the money. The lender may look at them to understand the account, but qualifying income comes from the eligible deposits after the factor and ownership share.
How many months of statements will I need?
Most programs review 12 or 24 months of personal statements, business statements, or both. Run the math on each window and compare. A growing business usually favors 12 months, and a business with a recent dip may be better off on 24.
What if my best months are the most recent ones?
A 12-month window will show them more fully, while a 24-month window will dilute them. The lender still runs a trend check, so a sharp spike can draw a letter of explanation. Steady deposits that rise gradually carry more weight than a single strong quarter.
Does projected revenue from a new location count?
No. Statement-based qualification looks backward at deposits that have already landed in the account. Revenue from a location that has not yet produced statements does not add to qualifying income.
Should I submit my personal or business account?
Submit the account that actually holds the business revenue. Business accounts usually take the expense factor, and personal accounts usually do not, but personal deposits must be identifiable as business income. If both accounts carry mixed activity, expect the lender to treat them as business accounts.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) arranging home equity lines of credit — primary-residence, second-home and investment-property lines — through a wholesale lending network in its 16 full-service states. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Scotsman Guide, “Rev Up the Engine for Non-QM Lending”
2. CFPB, Ability-to-Repay and Qualified Mortgage Rule Small Entity Compliance Guide
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement HELOC Rules Texas Homeowners Face on Occupancy · Can a Self-Employed Landlord Get a Bank Statement HELOC in Texas? · Should a Self-Employed Investor Use a Home HELOC for Rentals?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.