How to Get a No Income Verification HELOC

A no-income verification HELOC can help people secure a line of credit without providing paperwork they may not have. Here’s how it works. 

A home equity line of credit (HELOC) offers a way to tap into the equity within your home so you can borrow against its value, but it requires paperwork that verifies your income. For those who might not have those documents, are unemployed or have a nontraditional income source, a no-income verification HELOC provides an option to still receive a line of credit to pay for renovations or other uses. 

That said, just because you can receive this type of HELOC doesn’t mean you necessarily should. We’ll go over the pros and cons of no-income verification HELOCs, who should apply for one who shouldn’t and provide tips on how to apply for and secure this loan option. 

What Is a No-Income Verification HELOC? 

A no-income verification HELOC allows those with no traditional income to pull equity from their home. Whether you’re applying because you have a complex income, such as rental properties or a small business or because you’re down on your luck and need some cash fast, you won’t need to prove that you can repay the loan immediately.

Instead, these loans consider other factors, such as your credit score, credit history, collateral and available assets.

How Does a No-Income Verification HELOC Work?

You can access the equity in your home without providing income verification. You won’t need a W-2, tax return or other proof of income to apply. Instead, you’ll prove that you have assets or nontraditional income to help pay for the loan.

For example, if you have rental properties that are more of a cost center than an income source currently, you can showcase their value as an asset to get the necessary loan. So while you don’t have current income to support the loan, you do have collateral that the lender can seize should you not repay the HELOC as agreed upon. 

Then, you can use the HELOC to fix up your rental property and hopefully get it back to profitability, improving your income. Other than that, a no-income verification HELOC works similarly to a traditional HELOC. 

After applying for and receiving the line of credit, you’ll enter the HELOC draw period, during which you can withdraw funds. This period usually lasts around 10 years, followed by the HELOC repayment period or the time you must repay the loan. 

HELOCs typically have variable interest rates, though some lenders may offer a fixed rate. 

Traditional HELOC vs. No-Income Verification HELOC

The primary distinction between a traditional HELOC and no-income verification HELOC is evident from their names. But there are a few other nuances to consider. 

A traditional HELOC might move along faster because proving income is simple with a W-2 or tax document. In contrast, a HELOC without income verification might be a little more time-consuming because the lender will have more questions about your assets and finances. The process can take longer for underwriting to confirm your eligibility to borrow. 

With income verification loans, you’ll require minimal documentation. With no-income loans, you might need to provide additional documentation to prove your ability to repay the funds. 

Additionally, when you bypass the income verification process, you might pay a higher interest rate for your HELOC. 

“Lenders often charge higher interest rates to offset the increased risk of not verifying income,” says Jose Garcia, president and CEO of Northwest Community Credit Union. 

Garcia adds that fewer lenders offer no-income verification HELOCs, which may limit homeowners’ options when looking for this loan type. If you do find a lender, Garcia says there’s a possibility that you may need more equity in your house compared to a traditional HELOC. 

How to Qualify for a No-Income Verification HELOC

Some might believe a loan without income verification means anyone can get it. But that isn’t the case. You’ll still need to qualify and meet this criteria.

Non-Traditional Sources of Income

While you might not have a job to prove your income, you can showcase other forms of income to show your ability to repay the loan. These alternative income sources might include the following.

• Social Security
• Disability
• Pension payments
• 401(k) distribution
• Child support
• Spousal support/alimony
• Government assistance
• Rental property income
• Trust distributions
• Government assistance
• Interest earned on savings or investments
• Dividends

Credit Score

Your credit score will be important in determining whether you are eligible for a HELOC. Credit scores below 670 will likely not qualify. Take some time to improve your credit score to demonstrate your creditworthiness. Another thing to keep in mind is that HELOCs affect your credit score slightly, so don’t be surprised if you see your number fluctuate after applying for this loan. 

Debt-to-Income Ratio

If you have too much debt, the lender will unlikely lend you funds. You should have a debt-to-income ratio of 50% or less. Some lenders even require a debt-to-income ratio of 50% or less. Pay down some debt before taking your HELOC if you can.

Home Equity 

To be eligible for a HELOC, you must have more than 15% equity in your home. To find how much equity you have in your home, take the home’s value, deduct any outstanding loans on the home and then divide the total home value by the equity. That’s the percent equity in your home that you currently have.

For example, if you own a $400,000 home and have an outstanding mortgage of $200,000, you have 50% equity in your home and can borrow from that equity so long as you meet other eligibility criteria.

Co-Signer or Co-Applicant

If you have no traditional income to qualify for a loan on your own, you might be able to add a co-signer or co-applicant with income to get the loan. Make sure your co-signer or co-applicant has good credit and steady income to ensure they’ll qualify. The more steady the income and better their credit score, the more attractive it will look to the lender.

How to Apply for a No-Income Verification HELOC

Learn the steps required to get a HELOC without verifying your income. Knowing the process in advance can help you prepare the required documentation and understand the process to keep things moving.

• Review eligibility requirements: Ensure that your credit, assets and nontraditional income meet the HELOC requirements. Reduce your debt as much as you can to ensure a sound debt-to-income ratio and review your credit reports to flag inaccurate information.
• Compare quotes: Request quotes from multiple lenders. Ideally, you’d work with lenders that complete a soft credit pull so you aren’t undergoing full credit pulls, which could impact your credit. You might find very different rates based on the lender, which means getting multiple quotes is well worth it. Don’t forget to factor in fees to the total loan cost.
• Apply: Complete the application process to apply for the loan. Many lenders now offer this completely online. Be ready with documents that show your financial standing, such as bank statements, to show alternative income or proof of assets.
• Provide additional documentation and respond to underwriting inquiries: This is the process’s longest and most complex stage. You’ll need to respond to questions from the lender and provide additional documents, as needed.
• Work with the lender to complete a home appraisal: Some lenders bypass the home appraisal depending on how much equity you have in your home and the amount you’re applying for with your loan. While you won’t need to do anything for an appraisal, you might need to sign documents to consent.
• Close the loan: Pay your closing costs and sign the final documents. Your line of credit should be available within a few business days from closing.

Who Should Apply for a No-Income Verification HELOC

While a no-income verification HELOC might not work for everyone, Garcia says certain homeowners could benefit from it, including: 

• Self-Employed or Non-Traditional Income Earners: “If you have a stable but nontraditional income source, a no-income verification HELOC can be a good option,” Garcia says. “It provides access to funds without the hassle of proving income through traditional means.”
• Those with High Equity: “If you have significant equity in your home and a good credit score, this type of HELOC can be beneficial despite the higher interest rates,” Garcia says. 
• Those Needing Quick Access to Funds: “If you need quick access to funds and can manage the higher interest rates, this can be a viable option,” Garcia says. 

The longtime finance expert adds that a traditional HELOC might still be a better choice because it offers lower interest rates and more favorable terms. “We always recommend consulting with a financial advisor to understand the best option for your unique financial situation,” he adds. 

Compare the Best HELOC Lenders from Benzinga’s Top Mortgage Providers

Looking for a HELOC lender? This list of leading Benzinga mortgage providers can help you start quoting multiple companies to find the best terms.

Alternatives to No-income Verification HELOCs

If you don’t qualify for a no-income verification HELOC or want to look into other options, consider these loan types.

Stated Income, Verified Assets (SIVA)

With a SIVA loan, you can state your income and then prove your assets. You won’t need tax returns or pay stubs, but you will need to prove your assets through bank account statements. Individuals with undocumented income, such as those who work for tips, find this a helpful option.

Stated Income, Stated Assets (SISA) 

These loans allow you to declare your income and assets without verification. Most often, self-employed individuals use these loans. It’s especially helpful if a business owner holds their assets in the business account and not their account.

No Income, Verified Assets (NIVA) 

A NIVA loan doesn’t require pay stubs or tax documents like a SIVA loan. But instead of using bank statements, you’ll prove collateral assets, such as a retirement account or pension. Retirees often use these loans to prove they have sufficient cash reserves, though they have no traditional income.

No Income, No Assets (NINA)

You’ll need to be a real estate investor to qualify for this loan type today. It is known as a no-doc loan. It does not require income or asset verification, but you will need to prove that you are employed.

Home Equity Investment 

You can access a lump-sum payment from your home by opting for a home equity investment. The catch is that an investor now owns a percent of your home. So as it appreciates, you’ll need to repay the investment at a higher rate. For example, if you take a loan for 20% of your $400,000 home, you’ll get $80,000 now. But if your home appreciates to $500,000 when you repay the loan, you’ll now owe $100,000 to the investor, meaning you’ve paid $20,000 for the loan.

Reverse Mortgage

Applicants who are age 62 or older can qualify for a reverse mortgage, which helps them pull equity from their home without monthly payments on the loan. You can get this as a line of credit or lump sum payment. Your home will pay you for the term selected without the requirements to repay the loan until you move or pass away. However, the loan repayment amount for your heirs will never exceed the home’s market value.

The Bottom Line

• No-income verification HELOCs are available, but you’ll still need to prove adequate assets or nontraditional income to qualify.
• Without income verification, you might pay higher interest rates for your loan.
• The loan still requires documentation and attention to the six-step application process.

Why You Should Trust Us

Benzinga has offered investment and mortgage advice to more than one million people. Our experts include financial professionals and homeowners, such as Anthony O’Reilly, the writer of this piece. Anthony is a former journalist who’s won awards for his coverage of the New York City economy. He’s navigated tricky real estate markets in New York, Northern Virginia and North Carolina.

For this story, we worked with Jose Garcia, president and CEO of the Illinois-based Northwest Community Credit Union, which offers multiple financial services including HELOC loans. 

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