Best Bank Statement HELOC Program to Buy a House With Your Current Home’s Equity

The Quick Read: The best program depends on your situation: a line on your current home supplies cash through a deposit-based income review, and that cash becomes the down payment on a separate purchase loan that still has to qualify on its own leverage, credit, reserve, and property rules, subject to lender guidelines.

• The collateral sets the ceiling. A line on an investment property tops out at 70% CLTV. Lines on a primary residence or second home reach 90% CLTV, and only at a 720 or better credit profile.
• Line size runs from $25,000 to $750,000. Anything above $500,000 is primary-residence only and requires a full appraisal.
• The line does not buy the house. It produces cash. The purchase loan, often a DSCR loan, is a separate file with its own tests.
• Title matters. The home securing the line must be held by an individual or a revocable living trust, not an LLC.
• Availability is narrower than the DSCR footprint. The HELOC programs are offered in 16 full-service states.

What Does a Bank Statement HELOC Do for a Purchase?

A bank statement HELOC turns equity in the home you already own into cash, using deposits instead of tax returns to document income. You then use that cash as the down payment and closing costs on a different property. The line and the purchase are two loans on two properties.

Self-employed borrowers use it because tax returns often show less income than the business actually deposits. Write-offs shrink the number a conventional underwriter sees.

The cash is only half of the job. The purchase loan has to be approved on its own. It has its own leverage tier, credit floor, reserve test, and source-of-funds review. Files that treat the line as if it settled the whole purchase are the ones that stall.

Key Terms Defined

HELOC: A revolving line secured by your home, with a draw period followed by a repayment period.

CLTV: Combined loan-to-value, which adds the first mortgage and the new line together and divides by the home’s value.

Draw period: The stretch when you can borrow from the line and, on these programs, pay interest only.

Source of funds: The paper trail showing where your down payment and closing cash came from.

DSCR: Debt service coverage ratio, which compares a rental’s monthly rent to its monthly payment (principal, interest, taxes, insurance, and any HOA dues).

Reserves: Liquid cash left after closing, usually counted in months of the property’s payment.

How Does Underwriting Treat the Line, Step by Step?

The line is reviewed as a borrower-income loan with a property behind it. Five things decide the file: equity and CLTV, qualifying deposit income, debt-to-income, credit, and the property. Here is the sequence.

1. Size the equity. Take the home’s value, multiply by the CLTV ceiling that fits your credit tier and occupancy, then subtract the first mortgage. What remains is the most the line can be. Lines at or below $500,000 ordinarily run on an automated valuation instead of a full appraisal, though a higher CLTV may call for a second valuation. You can ask for a full appraisal in any case.

2. Document income from deposits. Market descriptions of bank statement programs commonly review 12 or 24 months of personal or business statements, with an expense factor that may apply. The reviewer adds up eligible deposits, strips out refunds, transfers, and one-time asset sales, and applies the expense factor to business accounts. Falling deposits can bring a letter of explanation. The exact method varies by lender and program, and qualification rests on documented income under the applicable program, subject to lender guidelines.

3. Run the debt-to-income test. Maximum DTI is 50%. Profiles from 600 to 679 are held to 45%, and anything above 45% needs a 680 minimum. The line is qualified on the interest-only payment calculated on the maximum draw, not on what you plan to borrow.

4. Pull and check credit. The programs use a single-bureau score tied to the primary wage earner. The report can be no more than 90 days old at closing, and there are no rescores. Plan the credit pull before you shop other loans.

5. Close and draw. At least 75% of the line is drawn at closing. That surprises borrowers who open a large line as a safety net. Size the line to the cash you need, because the draw happens up front.

Which Programs Exist, and How Do They Differ?

Lendmire is a broker, not a lender. Its wholesale partners write two HELOC programs, and the right fit depends on the scenario. This article calls them the higher-leverage program and the longer-runway program.

The higher-leverage program allows combined exposure up to $2,000,000 across a borrower’s lines. The longer-runway program caps combined exposure at $750,000 and applies tighter tradeline rules: two tradelines seasoned 12 months or one seasoned 24, with a housing history of 0x30x6 and 1x30x12 at 640 and above, and 0x30x12 from 600 to 639. The longer-runway program also accepts modular factory-built homes and 2-4 unit properties at a 640 minimum.

On both programs a borrower is limited to three lines, and an owner with more than 15 financed properties is not eligible. The best program for your situation comes down to your credit score, how much cash you need, the property type, and your housing payment record.

The 90% tier on a primary residence applies up to $500,000 only. Above $500,000, the line caps at 75% CLTV, requires a full appraisal, and needs a credit profile of 700 or better (720 on the longer-runway program). Other CLTV tiers sit in between. A 700 score on a primary residence, for example, moves from 85% CLTV up to $500,000 to 75% CLTV up to $750,000.

What Do the Draw Structures Look Like?

On primary residences and second homes there are two structures. One runs a 3-year interest-only draw followed by a 17-year fully amortizing repayment. The other runs a 5-year interest-only draw followed by a 25-year repayment. Investment lines use the 5-year draw and 25-year repayment only.

Pricing floats through both the draw and the repayment periods and never converts to fixed. That is the same pattern a federal consumer regulator’s HELOC explainer describes: an open-end line with a draw period, then a repayment period, and a risk of losing the home if you cannot repay. The payment steps up when the repayment period starts. Plan for that step on day one, not in year four.

After closing, the minimum subsequent draw is $1,000 on the longer-runway program, and $4,000 in Texas. The higher-leverage program does not state subsequent-draw minimums.

Where Does the General Rule Break?

The general rule is that equity in one house can fund a down payment on another. These are the places it stops working.

LLC titling. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title on the line. That is the sharpest structural difference from a DSCR loan, where an LLC borrower is common, subject to program terms. If your current home or rental is already deeded to an LLC, the line needs a vesting change first, or a DSCR cash-out refinance is the better path.

The rental clause. A federal HELOC booklet notes that a line’s terms may prohibit renting the home out, and that selling the home generally requires paying the line off. Read the occupancy terms before you plan to convert your current home into a rental later.

Borrowed funds by bucket. The purchase lender tests down payment, closing costs, and reserves separately. Across Lendmire’s wholesale network, many DSCR programs accept secured borrowed funds toward the down payment and closing costs. Most do not count them toward reserves. Some cap the borrowed share, and the strictest overlays want part of the down payment unborrowed. Read the purchase program’s source-of-funds rules before you draw.

Property type. Single-family, 2-4 units, PUDs, townhomes, and condos (including non-warrantable) are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not. Sub-640 profiles are limited to single-family residences with a clean 12-month housing history on the longer-runway program.

Credit history. A bankruptcy needs 4 years of seasoning from discharge or dismissal on both programs. Foreclosure-family history splits. One program seasons a foreclosure at 7 years and a deed-in-lieu, pre-foreclosure, or short sale at 4. The other declines that history regardless of age.

State rules. A few states carry their own terms. A Texas primary residence is a homestead and caps at 80% combined loan-to-value. Properties listed for sale, or listed within the past 60 days, are ineligible in several states. The HELOC programs run in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA.

What Does the Purchase Loan Want to See?

The purchase loan is where most files get tight. For an investment purchase, Lendmire’s network typically places DSCR loans at 75% to 80% LTV (20% to 25% down), with select programs reaching 85% LTV (15% down) around a 700+ score. Credit floors run from 620 in parts of the network to roughly 660 on most programs, with 700+ opening the strongest tiers. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders).

DSCR compares the new property’s rent to its own payment. It does not include the HELOC payment. That payment still comes out of your cash flow, so rent that clears 1.00 on the purchase does not mean the whole picture is positive. Repairs, vacancy, management, and capex sit outside the ratio.

Here is the practical part. 1.00 is where many select programs start, and stronger coverage can open better leverage. A separate select-lender path accepts coverage below 1.00 with leverage and terms adjusted. For the full mechanics, see the complete DSCR loans guide.

Reserves vary by lender, leverage, loan size, and transaction type. They commonly run around 6 months of PITIA. Conservative rate-term files at modest leverage under $1,500,000 can see reserves waived, and loans above that size typically step up to about 9 months. A line draw does not build reserves. Hold unborrowed liquidity for that test.

A larger down payment lowers the payment and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. Strong files clear two tests: enough equity and enough rental coverage.

What Does the Decision Look Like in Practice?

Consider an owner whose primary residence has a first mortgage near 50% of value and who carries a 720 profile. The 75% CLTV tier leaves 25 points of value to borrow against. The 90% tier would leave 40 points, but only up to $500,000 of line. The extra points do not matter if the line size cap bites first.

Now picture the same owner wanting to use a rental they already own as the collateral. The ceiling drops to 70% CLTV, the credit floor rises to 700, and the line caps at $500,000. A first mortgage near 55% of value leaves 15 points of room.

Run the purchase side next. A rental bought at 75% LTV needs 25% down plus closing costs. The line can supply part of that, depending on the purchase program’s borrowed-funds rules. Then the purchase has to carry reserves from cash you did not borrow. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

Who should skip this? Anyone whose rent only barely covers the purchase payment, with no cushion for the line’s payment on top. The line’s payment steps up when repayment starts and floats the whole time. Experienced investors usually plan an exit, such as a refinance or a sale, to pay the line down. Treat the line as short-term money.

Funds drawn on one property and used on another can raise questions at tax time. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.

For related walkthroughs, Lendmire’s explainer How to Tap Home Equity Without Tax Returns Using a Bank Statement HELOC covers the documentation side.

What Should You Have Ready Before You Apply?

Clean files go through review with fewer preventable gaps. Gather these first.

• Twelve to 24 months of statements for the accounts you are using, with large transfers between your own accounts labeled.
• Written explanations for any unusual deposits.
• Your current first mortgage statement, insurance declaration, and tax bill.
• Proof of title, confirming an individual or revocable trust holds it.
• Liquid funds for reserves that are not borrowed.
• A fresh credit report within the 90-day window.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. It arranges HELOC and DSCR financing through select lenders in its wholesale network and never lends itself. DSCR programs are available across 41 markets, including Washington, D.C. The HELOC programs described here are limited to 16 full-service states. All figures are subject to lender guidelines and full file review. This is not a commitment to lend. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

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. Call 828-256-2183 to talk through the scenario.

References

1. HousingWire – Non-QM guide

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

3. CFPB HELOC booklet