How Much Can You Borrow on a Bank Statement HELOC on a Severance Package?

The Quick Read: Usually less than your equity suggests, and severance itself adds little or nothing to the line. The line size is capped by your equity and your credit profile, then limited again by the recurring income a lender can document. A one-time payout from a former employer has an end date, so most lenders discount it or leave it out. Severance can still pay for down payments, closing costs, and reserves.

• Equity sets the ceiling. Income decides whether you reach it.
• On this network, an investment-property line tops out at 70% combined loan-to-value (CLTV) and $500,000.
• Bank statement income comes from recurring business or self-employment deposits, not a former employer’s payout.
• A laid-off W-2 employee with no business usually has nothing for the method to average.
• A rental that covers its own payment can qualify on property income, which is a different route.

How Much Can You Borrow? The Two Tests

Every line passes through two gates. The first is equity. The second is income. Severance only touches the second gate, and it touches it weakly.

The equity test works like this. Take the home’s value, multiply by the CLTV limit your credit profile allows, then subtract what you already owe. What is left is the most you could borrow. CLTV means combined loan-to-value: all debt secured by the home, existing mortgage included, as a share of its value.

The limits depend on how you use the property. Across the wholesale network Lendmire brokers through, the ceilings are tiered by occupancy:

The 90% figure exists only at a 720-or-better profile on a primary residence or second home. On an investment property, 70% is the ceiling with no tier above it. Primary residences above $500,000 are capped at 75% CLTV, and a line that size needs a full appraisal. All figures are subject to lender guidelines and full file review.

Some equity lines in the wider market allow higher CLTV caps. Those describe the broader market. They do not describe this network’s investment-property ceiling of 70%.

Why Severance Doesn’t Raise the Line

Bank statement programs are built for self-employed borrowers. The lender reads 12 to 24 months of deposits and turns them into monthly income. Scotsman Guide describes the method as analysis of 12 to 24 months of personal or business bank statements to determine ability to repay. It also notes that ability to repay, asset confirmation, and income verification still apply. A bank statement program is not a free pass.

Severance fails the method’s basic premise. It comes from a former employer, it is a single payout or a short series, and it ends. A lender averaging your deposits is looking for revenue that will keep arriving. A lump sum sitting in your account can also distort the average, so many lenders screen it out as a non-recurring deposit. Whether it is excluded or discounted varies by lender.

The same logic shows up outside non-QM lending. Benzinga reported on a 61-year-old homeowner with strong credit, no mortgage, and substantial equity who was denied a HELOC. He was told severance was a one-time payment and could not count as qualifying income.

Nothing in the rules makes that mandatory. Under the open-end mortgage rule in Regulation Z, any current or reasonably expected income may be considered, but the lender must verify what it relies on. So the question is not whether severance is allowed. It is whether a given lender’s guidelines count it.

How Different Deposits Get Treated

Lenders vary, so read this as the usual pattern rather than a rule.

Business accounts get an expense factor applied before income is figured. Scotsman Guide’s overview of non-QM underwriting notes a standard factor is common, and that a profit-and-loss statement or a tax professional’s expense statement can be used instead.

What the Math Looks Like

Run the numbers on a hypothetical investment property: a home valued at $600,000 with an existing mortgage, and a credit score of 720. The ceiling is 70% CLTV, so the lender starts from 70% of the value and subtracts the existing balance. If the mortgage balance is already near that level, the line is small or zero, no matter how much severance sits in your account. If the balance is well under it, the line is larger, but never above $500,000. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

Now stack the income test on top. Say the 12-month window shows regular business deposits that produce enough monthly income to carry the payment. The line can reach the equity ceiling. Say instead the window shows twelve months of payroll followed by one big severance deposit. The lender may have little recurring income left to average. The equity is identical in both cases. The result is not.

One program detail matters here. Lines on this network are qualified on the interest-only payment calculated on the maximum draw, with a debt-to-income (DTI) ceiling of 50%. That ratio is monthly debts divided by monthly income. Credit profiles from 600 to 679 run to 45%, and a ratio above 45% needs a 680 minimum. Thin income hits that ratio hard.

Who This Fits, and Who It Doesn’t

Fits: a self-employed investor or business owner with a steady deposit history who also got a severance from a past job. The business deposits carry the file. Severance is a bonus at most.

Doesn’t fit: a W-2 employee who was laid off, has no business, and has only a few months of payroll followed by a lump sum. The bank statement method needs a window of recurring deposits to average. A gap leaves nothing to average.

A middle case is the investor with both. Business deposits may qualify, and the severance likely won’t add to them. Plan the line size on the business income alone.

Some programs elsewhere in the market use an asset-based method, where a large balance counts as cash rather than paycheck income. Whether a given lender offers that is a lender-by-lender question, so ask when scenarios are shopped.

Where Severance Does Help

Severance is useful money. It just isn’t qualifying income. Use it for:

• Reserves, which lenders look at alongside income.
• The down payment on the next rental.
• Closing costs and repairs.

If the goal is buying the next rental while between jobs, the property route is often the better fit. A DSCR loan (debt service coverage ratio, meaning the property’s rent compared with its full monthly payment of principal, interest, taxes, insurance, and any HOA dues) qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. It does not read your paycheck. Coverage of 1.00 is where select programs start, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, and management sit outside the calculation.

Lendmire’s complete DSCR loans guide walks through the full structure. For investors working this exact situation, Lendmire’s piece How to Qualify for a Bank Statement HELOC While Living on a Severance Package covers the qualification side in more detail.

Risks Before You Draw

Know what you are signing up for.

• Payments can change. Pricing on these lines floats through both the draw period and the repayment period. It never converts to fixed. With no paycheck, a rising payment is a real risk.
• The draw period ends. Investment lines use a 5-year interest-only draw followed by a 25-year fully amortizing repayment. When the draw ends, the payment structure changes, and your income needs to be there.
• Most of the line is drawn up front. At least 75% of the line is drawn at closing, so you start paying on a large balance immediately.
• An existing line can shrink. The CFPB’s HELOC booklet notes lenders can reduce your credit line if the value of your home declines. A line you already hold is worth drawing on before income stops, if it suits your plan.

Also check ownership. On this network, title must be held by you personally or by a revocable living trust. Properties deeded to an LLC cannot take one of these lines, and a DSCR cash-out is the usual alternative. Lines are available only in the 16 states where Lendmire is a full-service broker.

What to Gather and What to Avoid

For a bank statement file, expect to provide:

1. Twelve to 24 months of statements, depending on the program. 2. A profit-and-loss statement or expense statement for business accounts. 3. Proof of the property’s value and your current mortgage balance. 4. Credit information, since the program floor is 600 and an investment line needs 700.

Avoid moving large sums between accounts right before applying, since transfers get screened out and muddy the averages. Don’t try to dress up a severance deposit as business revenue. Lenders verify what they count.

If you are weighing a home equity line against a rental-income loan and want to see how the numbers work, Lendmire can help you compare options based on the property, the equity available, credit profile, combined leverage, and your goals. As a broker, Lendmire shops a network of wholesale lenders and matches the scenario to the program. Nothing here is a commitment to lend, and qualification is subject to lender guidelines and full file review.

For a rental investor between jobs, the property’s rent, not the paycheck, is usually the stronger thing to build a loan around.

For current guidelines and terms, see Lendmire’s bank statement HELOC programs page.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, and every line is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Scotsman Guide, Helping borrowers fit the boxes

2. Benzinga, HELOC denied on severance

3. CFPB, 12 CFR 1026.34

4. Scotsman Guide, Rev Up the Engine for Non-QM Lending

5. CFPB HELOC booklet