The Quick Read: The right bank statement HELOC program for a home with a PACE assessment depends on whether the lender will lend with that senior tax lien in place, count it in combined leverage, and still leave you usable equity, since bank statements settle how income is documented but never change which lien ranks first.
- A PACE assessment is repaid through the property tax bill and generally ranks ahead of any mortgage or credit line, though how it is treated in your area is a question for a qualified local tax or legal professional.
- Most programs count the PACE balance against your combined loan-to-value (CLTV), so it shrinks the line you can get.
- On Lendmire’s network, an investment-property line tops out at 70% CLTV, and a primary-residence line can reach higher at stronger credit tiers.
- The title must be held by you or your revocable living trust. An LLC-held rental points toward a different product.
What a Bank Statement HELOC Actually Does
A bank statement HELOC is a real, recorded home equity line of credit. The only difference is how income is documented. Instead of tax returns, the lender reviews deposits into your personal or business accounts over a look-back period, commonly a year or two depending on the program. Self-employed owners whose tax returns understate cash flow are the usual fit.
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.
That is the whole benefit. It answers the income question. It does not answer the lien question, the equity question, or the title question.
Lendmire is a mortgage broker, not a lender. It places these lines through select wholesale partners, and each one sets its own appetite. That matters here because lender policy on PACE is not uniform. One lender may lend behind it, while another may insist it be paid off before closing.
Why a PACE Assessment Changes the Picture
PACE stands for Property Assessed Clean Energy. It funds home improvements, usually solar or energy upgrades, and is repaid as a line on your property tax bill. The obligation is tied to the property, so it generally stays with the home if the home is sold.
The tax-bill collection is the key to everything else. A county government FAQ explains that a PACE assessment carries higher priority than most other liens, including a mortgage. It adds that missing the payment is treated like missing property taxes. That can lead to foreclosure even when every mortgage payment is current.
For a new line of credit, the practical result is simple. No new lender can rank ahead of PACE. It does not matter whether the line sits in first or second position behind your mortgage, because the assessment is senior to both.
The same priority is described in the Federal Register’s discussion of PACE programs, which calls it a government tax lien seeking super-priority over other liens, including pre-existing first mortgages. Priority can vary by state, so do not assume the same ranking everywhere. Still, plan on PACE coming first.
Two things follow for the lender. The assessment is debt that outranks the lender’s own collateral position, and it raises your annual tax bill. Some lenders decline the file for that reason alone. Others will lend if the numbers leave enough cushion.
Does PACE Disqualify the File or Only Shrink It?
It depends on the lender, and your broker should find that out before you apply. Policy generally falls into one of three buckets:
1. The lender lends with PACE in place and counts the balance in combined leverage.
2. The lender requires payoff at or before closing, often from the line’s own draw.
3. The lender declines any file with an outstanding assessment.
You cannot ask a line lender to subordinate a statutory tax lien. It is not their lien to move. So the real choices are payoff or a lender that accepts it.
This is where a broker earns the fee. A single bank sees only its own policy. A broker working with many wholesale lenders can screen for bucket one or two before you spend time on a bucket-three file.
How the Underwriting Reads a PACE Home, Step by Step
The review follows a predictable sequence. Knowing it helps you prepare.
1. Title search. A preliminary title report or the county tax record shows the assessment. It may not appear on your credit report or your mortgage statement, so many owners are surprised when it surfaces here.
2. Income review. Deposits are analyzed over the look-back period. This step is independent of PACE.
3. Combined leverage. The lender adds your first mortgage, the PACE balance, and the new line, then divides by the property value. The result is your CLTV.
4. Debt-to-income. The higher tax obligation from PACE flows into your debt ratio. On Lendmire’s network the maximum is 50%, and 45% for credit profiles from 600 to 679. The ratio is tested on the interest-only payment calculated on the maximum draw.
5. Valuation. Lines at or below $500,000 ordinarily run on an automated valuation. A full appraisal is required on every line above $500,000, and you may request one in any case.
6. Payoff or acceptance. The lender either accepts the assessment in place or requires it cleared.
The Equity Math With PACE Ahead of You
PACE affects your line mostly through arithmetic. Here is a modeled example using percentages of home value. These are assumptions for illustration, not market data.
| Item | Without PACE | With PACE |
|---|---|---|
| PACE balance | None | 10% of value |
| Investment-property CLTV ceiling | 70% | 70% |
| Room left for the new line | 20% of value | 10% of value |
The ceiling did not move. The PACE balance simply used up half the room. On an owner-occupied home with a stronger credit profile and a higher ceiling, the same PACE balance still takes its bite. It just leaves more cushion because the ceiling starts higher.
Combined leverage is only one test. Credit, title, and debt-to-income still apply. A strong equity picture does not rescue a file that fails the title rules.
What Makes a Bank Statement HELOC Program Best for a Home With a PACE Assessment?
The best program for your situation is the one that clears four tests at once. Which program that is depends on your property type, credit profile, leverage need, and documentation. No single answer fits every borrower.
Screen any program, through any broker, with these questions:
- Does the lender accept an outstanding PACE assessment, or require payoff? This is the gating question.
- How does it count the balance in combined leverage? Ask whether it uses the full outstanding balance.
- Can the line pay off PACE at closing? Programs differ on whether proceeds may retire the assessment.
- How is deposit income analyzed? Ask about business versus personal accounts, the length of the look-back, and how expenses are treated.
- What does the occupancy tier allow? Ceilings differ sharply by whether the home is a primary residence, a second home, or an investment property.
- What happens on a later refinance of the first mortgage? The answer shapes your exit plan.
On Lendmire’s network, the figures below are the ones that matter most. Each applies only within its occupancy tier, and all are subject to lender guidelines and full file review.
| Occupancy | Credit floor | CLTV ceiling | Max line |
|---|---|---|---|
| Investment property | 700 | 70% | $500,000 |
| Second home | 640 | 90% at 720+ | $500,000 |
| Primary residence | 600 | 90% at 720+ | $750,000 |
The 90% figure exists only at a 720-or-better credit profile, and lower tiers sit well below it. On a primary residence, a 720+ profile gets 90% CLTV up to $500,000 or 75% CLTV up to $750,000. A line above $500,000 is available only on a primary residence, caps at 75% CLTV, and requires a full appraisal. Some states carry their own caps. Ask your broker for the tier that fits you.
The structure also matters if you plan to use the line to retire PACE. On a primary residence or second home, there are two draw structures. One has a 3-year interest-only draw followed by a 17-year repayment. The other has a 5-year draw followed by a 25-year repayment. Investment lines run only the 5-year draw with 25-year repayment. At least 75% of the line is drawn at closing, and the line’s pricing floats and never converts to fixed. A large initial draw can fund a payoff at closing, where the lender allows it.
Your Options When the Home Has PACE
There is no universal right move. Compare these paths on your own numbers.
| Option | What happens | Best fit |
|---|---|---|
| Lend behind PACE | Line sits behind the assessment | Strong equity after PACE |
| Retire PACE with the draw | Payoff at closing from line proceeds | Tight equity, lender allows it |
| Pay PACE with cash | Assessment cleared before applying | Cash-rich owners |
| Switch products | Use a DSCR cash-out refinance | LLC-held or larger equity needs |
| Wait | Reduce the balance first | Thin equity, no urgency |
Two of these deserve a closer look.
Retiring PACE with the line. This can make sense when the assessment is the only obstacle. Clearing it removes the senior lien, simplifies title, and lowers the annual tax bill. The tradeoff is that you convert tax-bill debt into a line of credit, and you should weigh the combined cost before doing it. 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.
Switching products. A bank statement HELOC solves an income-documentation problem. If your real obstacle is the title or the size of the equity need, a different product may fit better. Investors holding the home in an LLC often land here, since LLCs cannot hold title on these lines. On Lendmire’s DSCR network, a cash-out refinance on a standard rental tops out around 75% LTV (70% on short-term-rental collateral), with about 6 months of seasoning commonly expected. Lendmire’s complete DSCR loans guide explains how that structure is reviewed on the property’s rental income, subject to lender guidelines.
Where the General Rule Breaks
Several edge cases change the answer.
Title and vesting. Title must be held by you individually or by an inter vivos revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. A property already deeded to an LLC needs a vesting change or a different product.
Residential versus commercial PACE. A federal consumer-credit rule for PACE applies to residential PACE only. Commercial PACE sits outside that framework but generally carries tax-lien priority too. If your rental is a small residential property, the residential type usually applies. That rule governs how PACE is originated. It does not move the assessment behind your mortgage.
Not every solar item is PACE. A solar lease, a power purchase agreement, an unsecured solar loan, a UCC-filed solar loan, and a PACE assessment appear on title differently and clear differently. Only PACE rides on the tax bill. Confirm exactly what you have before you shop.
Property type. Single-family, 2-4 unit, PUD, townhome, and condominium (including non-warrantable) are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agricultural-zoned properties are not offered.
Credit and history. A bankruptcy needs 4 years of seasoning from discharge or dismissal. Foreclosure history splits by program on primary residences and second homes, and investment files follow a 7-year foreclosure and 4-year deed-in-lieu, pre-foreclosure, or short-sale path.
Exposure. You are limited to three lines, and owning more than 15 financed properties makes you ineligible.
Geography. Lendmire places these home equity lines in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. That is narrower than its DSCR investor footprint of 41 markets, including Washington, D.C.
Planning Your Refinance Exit
Think about the exit before you take the line. If you later refinance your first mortgage, the new lender will see both the PACE assessment and your junior line. Some first-mortgage lenders require PACE payoff at refinance. Others require the line to be subordinated, which means the line lender agrees to stay behind the new loan.
Subordination is not automatic. It depends on the line lender’s policy and on whether the new combined leverage still fits. A PACE assessment that has already been paid off removes one of those hurdles. For a sale, the assessment generally travels with the property, so a buyer or title company will want it addressed before closing.
Documents to Gather
Preparation shortens the back-and-forth. Collect these items before the file goes to a lender:
- Your most recent property tax bill showing the PACE line item.
- A balance or payoff statement from the PACE program administrator.
- Deposit statements for the full look-back period for every account used for income.
- Your current first mortgage statement.
- Proof of how title is held, such as a deed or trust certificate.
- Homeowner insurance declarations for the property.
When This Product Is the Wrong Tool
Be honest about the mismatches. A bank statement HELOC is the wrong fit when title sits in an LLC, when the PACE balance consumes most of your available equity, or when your credit sits below the investment-property floor of 700. It is also the wrong fit when your state is outside Lendmire’s 16 placement states. In those cases, a DSCR cash-out refinance or a payoff-first plan is often cleaner. Finally, if you are weighing a new PACE assessment, understand first that it will reduce what you can borrow later.
Key Terms Defined
Bank statement HELOC: A home equity line of credit where income is documented through account deposits instead of tax returns.
PACE assessment: A property-tax-bill obligation that funds home improvements and stays with the property.
CLTV (combined loan-to-value): All loans secured by the property, plus any senior assessments, divided by its value.
Lien priority: The order in which claims on the property get paid, which decides who is paid first in a default.
Subordination: A lender’s agreement to rank behind another lien, usually after a refinance.
Vesting: How title to the property is held, such as individually or in a revocable living trust.
Frequently Asked Questions
Will a lender refuse my file because of a PACE assessment?
Some will, and some will not. Policy varies by wholesale lender, and many decline or require payoff. A broker can screen your scenario against several lenders before you apply. Every file is reviewed individually.
Can I use the line to pay off PACE?
Often, yes, if the lender allows proceeds to retire the assessment. At least 75% of the line is drawn at closing, which can fund a payoff. Confirm this with your broker first, since policies differ.
Does PACE count against my leverage?
Typically yes. Most programs add the outstanding balance to your first mortgage and the new line when computing CLTV. That reduces the room under the ceiling for your occupancy type.
Does a bank statement program work for self-employed income?
Yes, that is its purpose. Income is derived from deposits over the look-back period under the applicable program, subject to lender guidelines. Credit, title, and leverage rules still apply.
How do I confirm PACE is on my title?
Check your property tax bill for a PACE line item and order a title report or lookup through the county. Ask the PACE administrator for a balance statement. Do this before you apply so nothing surprises you.
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. The illustrative calculator on this page can give you a rough sense of the numbers, though it is not a quote. Whether a given program fits a home with PACE comes down to the lender, the equity left after the assessment, and how the property is titled.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and real estate investors in its 16 full-service states open home equity lines of credit arranged through wholesale lenders. Lendmire is never the lender; line amounts, ceilings and terms are set by the lender under its 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.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Monroe County, FL PACE FAQ on lien priority
2. Federal Register, Property Assessed Clean Energy Program
3. Husch Blackwell on residential PACE financing
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a Bank Statement HELOC on a Home Held in a Revocable Trust? · How a Bank Statement HELOC Sizes the Line Without Tax Returns · Bank Statement HELOC vs Bank Statement Cash-Out Refinance for Investors Comparing Advice
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.