How a Bank Statement HELOC Works on a Duplex With One Unit Vacant

The Quick Read: A bank statement HELOC reads the borrower’s deposits rather than the building’s rent, so an empty unit does not cancel the file. The vacant unit adds no income and subtracts none. It can still shape how the property is valued and reviewed, and the payment on the line keeps running while the unit sits empty.

• Occupancy class comes first, and the vacancy does not change it. Living in one unit makes it a primary-residence line. Renting both units makes it an investment line.
• On an investment property, the network ceiling is 70% CLTV with a 700 minimum credit profile and a $500,000 maximum line. On a primary residence, the ceiling reaches 90% CLTV only at 720 or better.
• Deposit income answers whether the borrower can pay. A rent-based test answers whether the property can pay. A vacancy hits the second test hard and the first one lightly.
• Title matters. An LLC cannot hold title on this product, subject to lender program requirements.
• Leasing the empty unit before applying is the cleanest fix for any rent-based alternative.

What a bank statement HELOC is

A bank statement HELOC is a standard home equity line of credit where income is documented from deposits instead of tax returns. The product does not change. Only the way income is proven changes.

A HELOC is an open-end line of credit. The CFPB explains that you borrow against it repeatedly during a draw period, then move into a repayment period when borrowing stops. Payments are often much higher once repayment starts. That step-up matters later here.

On a deposit-based file, the lender totals eligible deposits across a set lookback period. It removes transfers and one-time credits. On business accounts it applies an expense factor, then averages the result by month. The statements replace tax-return income. They do not replace credit review, debt review, lien review or property review.

How underwriting treats the file, step by step

Here is the sequence a file moves through across the wholesale network.

1. Occupancy class is set. If the borrower lives in one unit, the file is treated as a primary residence. If every unit is rented, it is an investment property. The vacant unit does not change the class. Whether the borrower lives in the building does.

2. Deposit income is calculated. Complete statements, every page, come in for personal or business accounts. Business accounts need at least a 680 credit profile for the deposit analysis. On an investment line the floor is already 700, so the deposit analysis is rarely the binding constraint there.

3. Credit and debts are reviewed. The maximum debt-to-income ratio is 50%. It is 45% for profiles from 600 to 679, and anything above 45% needs at least a 680. The lender qualifies the borrower on the interest-only payment calculated on the maximum draw, not on the amount drawn day one. Every other debt on the file counts, including the first mortgage.

4. Combined leverage is tested. The lender adds all liens, first mortgage plus the new line, and divides by the property value. That is the CLTV.

5. The property is valued. Lines at or below $500,000 usually run an automated valuation with no traditional appraisal, though a higher CLTV may call for a secondary valuation. A borrower can also request a full appraisal. A full appraisal is required on any line above $500,000.

6. Title and lien position are checked. The line can sit in first or second lien position.

Every figure here is subject to lender guidelines and full file review. This is not a commitment to lend.

Where the vacant unit actually shows up

On a pure deposit-based file, the vacancy touches three things: the valuation, the lender’s eligibility rules, and the borrower’s carrying cost. It does not touch the occupancy class or the income calculation, because the class turns on whether the borrower lives there and the income calculation reads deposits, not leases.

An investment line is capped at $500,000, so it almost always sits in the automated-valuation lane. A vacancy may never appear on a report in that lane. If a full appraisal is ordered, a duplex goes on Form 1025, the small residential income property report. Fannie Mae’s Selling Guide lists that form for two- to four-unit properties, and Form 1004 for one-unit homes. The blank Form 1025 reports rent unit by unit, with an occupant status of owner, tenant or vacant. A vacant unit shows as vacant with market rent only.

Do not confuse this with a rent-based test. In a DSCR file, which divides monthly rent by the full monthly obligation (principal, interest, taxes, insurance and any association dues), the empty unit’s rent drops out of the numerator. In a deposit-based HELOC, the numerator is the borrower’s deposits.

Which unit is empty, and who lives where

Three situations come up repeatedly on duplex files.

Lines above $500,000 are primary-residence only. They require 700 or better (720 on the longer-runway structure), cap at 75% CLTV and need a full appraisal. The empty unit is a minor point on that file.

The second and third rows run on the investment tier. The ceiling is 70% CLTV, whether the credit profile is 720 or 700. Credit above 700 buys eligibility, not extra leverage. The line cannot exceed $500,000. For a unit between tenants, whether the lender accepts the file depends on its vacancy policy, and the network’s guidelines govern, not a general rule.

One timing pattern worth knowing: a BiggerPockets Rookie Reply episode notes that investors often take a line while the property is still their primary residence, then move out and rent it. The line’s own terms and the borrower’s honest occupancy statement control that move.

Why a duplex feels a vacancy more than a fourplex

A duplex has two rent streams. When one stops, half the rent is gone. The same empty unit costs a fourplex only a quarter.

This matters mostly if the borrower is comparing the line with a rent-based loan. Take a modeled duplex that clears roughly 1.2x with both units rented. Keep the same obligation, remove one unit’s rent, and coverage falls to about 0.6x. That is below the 1.00 where many select DSCR programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Neither one is a cash-flow measure. Coverage compares rent to the monthly obligation only. Repairs, vacancy, management, utilities and capital costs sit outside it.

A deposit-based line avoids that math. It does not avoid the payment.

The cost of carrying a drawn balance through a vacancy

At least 75% of the line is drawn at closing. The cost floats through the draw and repayment periods and never converts to fixed. An empty unit does not pause any of that.

Investment lines use a single structure: a 5-year draw and a 25-year fully amortizing repayment. Primary residences and second homes have two options, a 3-year draw with a 17-year repayment, or the 5-year draw with a 25-year repayment. Tennessee shortens both. When repayment starts, the payment steps up, as the CFPB page above describes. The stress test for a half-empty duplex is that later payment, not the early interest-only one.

Practical points on a vacancy:

• Hold reserves that cover the payment through a lease-up, not just through closing.
• Ask the insurer how it treats a vacant unit. Some policies restrict coverage for vacancy. Verify before you rely on the policy.
• State occupancy accurately. A material misstatement about occupancy on the application can cause serious problems later.

Documents and deposit hygiene

The items below help keep the statements complete and easy for an underwriter to review.

• Every page of every statement, with no pages missing.
• Rent deposits kept separate from business revenue where possible. Mixed accounts invite questions about double-counting.
• Written explanations for large one-off deposits.
• Records of transfers between the borrower’s own accounts, which get removed from income.
• The first mortgage statement and proof of other liens.
• Vesting documents. Title must sit with the individual borrower or an inter vivos revocable living trust.
• A rent roll or leases if the lender asks for them on an investment file.

Statements that look clean in the borrower’s mind often look different after transfers and non-income credits are stripped out. Run that screen before submitting.

Edge cases where the usual rule breaks

Title in an LLC. An LLC, corporation, partnership, or irrevocable, blind or land trust cannot hold title on this line. A property already deeded to an LLC needs a vesting change first, or a DSCR cash-out instead, subject to program terms.

Two empty units. Many programs cap vacancy. The cap comes from the individual lender’s guideline, so a duplex with both units empty is a different conversation.

A listed property. A property listed for sale, or listed within the past 60 days, is ineligible in several states.

Property type. Duplexes are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agricultural-zoned property are not. A 2-4 unit property has a 640 minimum on one of the two wholesale programs.

Footprint. The product is available only in Lendmire’s 16 full-service states, narrower than its 41-market DSCR footprint.

Apply now, lease first, or switch products

The right move depends on what the borrower needs the money for and how long the vacancy will last.

The DSCR cash-out path tops out at about 75% LTV on a standard rental across most of the network. It typically expects about 6 months of seasoning and often around 6 months of reserves, depending on the lender and loan size. Loans reach up to $3,000,000 on standard programs, smaller balances are available through select lenders, and 30-year fixed is the base structure. The complete DSCR loans guide walks through those mechanics.

One more point from investors comparing routes: a BiggerPockets thread includes a commenter who recommends comparing a rental-property line with a cash-out refinance, because the line’s terms may come out worse. That is one commenter’s view, but the comparison is a fair one.

Key Terms Defined

CLTV: the sum of all liens on the property divided by its value.

Occupancy class: whether the borrower lives in the building (primary residence) or every unit is rented (investment property).

Expense factor: the share of business-account deposits a lender subtracts as business costs before counting the rest as income.

Draw period: the stretch when the borrower can take money from the line, followed by the repayment period.

DSCR: monthly rent divided by the full monthly obligation. It is a rent-based test, separate from deposit income.

Form 1025: the appraisal report used for two- to four-unit properties, which lists rent and occupant status by unit.

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.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

Investors who want the broader program framework can review how DSCR loans work.

References

1. CFPB: What Is a Home Equity Line of Credit HELOC

2. Fannie Mae Selling Guide B4-1.2-01

3. BiggerPockets Rookie Reply

4. biggerpockets.com: Can I Put a HELOC on an Investment Property Plus General Advice on This Deal