Can You Get a Bank Statement HELOC With a Solar Lien or an Unpermitted ADU?

The Quick Read: It depends on what the solar lien actually is, because an equipment-only filing can often stay in place while a fixture filing or a PACE assessment usually has to be cleared first, and an unpermitted ADU rarely ends a file on its own but usually shrinks the value the lender will count. Bank statements document income only. They do not change collateral or title review.

• A solar filing on the equipment alone is a different problem from a claim recorded against the real estate.
• An assessment-style solar lien (PACE) generally sits ahead of a new second lien, so payoff and release usually come first.
• An unpermitted ADU is mostly a valuation issue, not a lien issue.
• Rent from an unpermitted unit typically earns little or no credit.
• Investment-property lines on this network top out at 70% CLTV, so lost value cuts the available line directly.

Income Is One Test, Collateral Is Another

Bank statement income answers one question: can the borrower repay? Collateral answers a different one: what is the property worth, and who is ahead of the new lender in line? A solar filing and an unpermitted ADU both land in the second bucket.

This is why self-employed owners get surprised. Their deposits can look strong and the file can still stall on title or valuation. Programs of this type exist for creditworthy self-employed borrowers who can’t show traditional income documents, a point the Ellington Financial annual report makes when it describes the non-prime lending category. Those programs relax how income is proven. They don’t relax the property.

Across the wholesale network Lendmire works with, a bank statement line is reviewed on documented income under the applicable program, subject to lender guidelines. Debt-to-income is capped at 50% on most files, and 45% for credit profiles from 600 to 679. The monthly obligation is figured on the interest-only payment at the maximum draw, so a large line weighs more than a small one.

What Kind of Solar Lien Do You Have?

Three different things get called a solar lien, and each is treated differently. The type decides the answer, so identify it before anything else.

A UCC-1 is a notice that the panels belong to someone else. It is not a mortgage on the house. Many solar loans and most leases produce this kind of filing, and lender treatment still varies from file to file.

A fixture filing is different. It sits in the county title search against the real estate, so a second-lien lender sees a claim that may rank ahead of or alongside the new line. Treat it as a clear-first item.

PACE is the hardest case. It is an assessment, and in many places it takes priority over the first mortgage. The ABA’s letter on residential PACE describes that precedence. A new line sits behind the first mortgage and any other senior claim, so a surviving PACE assessment is a title problem for the lender, not just a pricing issue. Agency-backed loans treat first-lien PACE the same way. The Federal Housing Finance Agency says a first-lien PACE loan blocks Fannie Mae and Freddie Mac from buying the mortgage, and it notes PACE can be structured as a subordinate lien. Those agency rules don’t govern a non-agency line. They show why lien priority, not the word “solar,” drives the answer.

Clearing a Solar Filing the Right Way

Paying off a solar loan does not remove the filing. The creditor has to record a UCC-3 termination, and you need to confirm it was recorded. A PACE payoff has to be in full, since a partial payoff leaves the priority claim standing.

A state-level UCC filing can also miss a county title search. That is why a UCC search belongs next to the title pull, not after it.

If the solar debt is large, the cleanup can change the whole plan. One option is to keep the low first mortgage and pay off the solar item from savings. Another is a cash-out refinance of the first mortgage that pays the item at closing, though the borrower gives up the existing first loan to do it.

How Does an Unpermitted ADU Change the File?

An unpermitted ADU is a valuation and legal-use problem. An appraiser works from comparable sales, not from what the unit cost to build, and unpermitted space is often treated as storage or given minimal value. Some underwriters give it none.

On a bank statement line, the borrower’s deposits carry qualifying, so unusable ADU rent does not hurt income. It still hurts value. Combined loan-to-value is the first mortgage balance plus the new line, divided by the home’s value. If the ADU’s value is stripped out, the room for a line shrinks.

On a DSCR loan the effect is sharper, because rent from the unit is part of the coverage calculation. DSCR compares rent to the full monthly housing obligation, and an excluded ADU can pull that ratio down. The complete DSCR loans guide covers how that ratio works.

Valuation method matters too. On this network, lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal, though a higher CLTV may require a secondary valuation. Every line above $500,000 needs a full appraisal, and a borrower can request one at any size. An automated valuation works from records and comparable sales, so it may not reflect permit status. Disclose unpermitted work honestly on the application. A problem that surfaces later, from a full appraisal or the lender’s review, costs more than one raised up front.

Legalizing the ADU can change the picture. Some appraisals are written subject to legalization, and a permitted unit is judged on a different basis than one that isn’t.

What the Network Allows (and Where These Problems Bite)

Program figures depend on occupancy, so the investment-property numbers and the owner-occupied numbers differ. All figures below are typical ranges from select wholesale lenders, subject to lender guidelines and full file review.

• Investment property: maximum 70% CLTV, minimum 700 credit score, line size up to $500,000, on a five-year interest-only draw followed by a 25-year fully amortizing repayment.
• Primary residence: CLTV tiers step with credit score, from 60% at a 600 score up to 90% CLTV, and that top tier exists only at 720 or better on lines up to $500,000. Lines can reach $750,000 on a primary residence, capped at 75% CLTV with a full appraisal.
• Second home: tiers run from 75% CLTV at a 640 score to 90% CLTV at 720 or better, on lines up to $500,000. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.

Several rules make a solar or ADU issue matter more. These lines can sit in first or second lien position. Title has to be held by the individual borrower or a revocable living trust. An LLC cannot hold title, so a property already deeded to an LLC needs a vesting change first. Availability is limited to the 16 states where Lendmire offers full-service lending.

A 70% ceiling leaves little cushion. Picture an owner of an investment property whose appraisal gives zero value to a backyard unit that the purchase price partly reflected. Combined leverage is measured on the lower value, so the line can come back well under what the owner planned around. Run the numbers on the stripped-down value before paying for anything else.

Both Problems at Once

When a financed solar system and an unpermitted ADU sit on the same property, the problems stack. The solar item may need payoff and release before the lender will go behind the first mortgage. The ADU may reduce the value that combined leverage is measured against. One affects lien order, the other affects room.

Sequence matters. Paying off a PACE assessment to open the line, then learning the appraisal strips the ADU, can leave a smaller line than the payoff justified. Classify the solar item, estimate value without the ADU, and only then decide whether the line still serves the goal.

Lender variation is real. Some wholesale lenders in the network are more flexible on filings and others are stricter, and a broker’s job is to match the scenario to the program that fits it. The best program for a situation depends on occupancy, credit, leverage need, and the exact type of lien.

The Cleanup Sequence

1. Pull title and run a UCC search. Find out whether the item is a state UCC-1, a county fixture filing, a mortgage or deed rider, or a PACE assessment.

2. Classify it. Equipment-only notice, real-estate claim, or priority assessment.

3. Choose a path: leave it as a title exception if the lender allows, pay it off, or restructure through a cash-out of the first mortgage.

4. Get the UCC-3 termination or PACE release recorded, then confirm it.

5. Re-run combined LTV using a value that excludes the unpermitted unit.

6. Decide whether to legalize the ADU before applying.

7. Apply with a complete package.

Documents to gather: title report, UCC search results, solar contract and payoff statement, lease or PPA terms if applicable, permit records or a legalization plan for the ADU, bank statements, and current mortgage statements.

Key Terms Defined

UCC-1: a state filing that gives notice a creditor has an interest in specific equipment, such as solar panels.

UCC-3: the filing that terminates a UCC-1 once the debt is paid.

Fixture filing: a recorded claim in county land records tying equipment to the real estate.

PACE assessment: a property-linked assessment collected with the tax bill that often ranks ahead of a first mortgage.

CLTV: the total of all loans on the property divided by its value.

ADU: a separate secondary dwelling unit on the same lot as the main home.

Subordination: an agreement that moves one lien behind another in priority.

When the Answer Flips

If the solar item is a PACE assessment, it is closer to fix-first. If the ADU supplied a large share of the value you were counting on, a line may be the wrong tool, and a cash-out refinance that clears the item at closing could fit better, depending on how much value the lender will recognize.

Investors who bought a house for its ADU income should be the most skeptical. If the plan only works when the unpermitted unit is counted, the plan depends on something the lender may not count. For a purchase or refinance of a pure rental, a DSCR loan may fit better than a home equity line. The two products work differently, and Lendmire’s walkthrough of what a bank statement line requires with these two issues goes deeper on documents.

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. Reach the team at 828-256-2183 or request a quote.

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

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.

References

1. Ellington Financial 10-K FY2025

2. American Bankers Association: Letter on Residential PACE

3. Federal Housing Finance Agency: Statement on Certain Super-Priority Liens