How Hard Is It to Get a HELOC?

It can be hard to get a home equity line of credit (HELOC). Approximately 33% of applicants were denied in mid-2026, according to recent data collected as a result of the Home Mortgage Disclosure Act. That means one in three don’t succeed in securing a HELOC, while two-thirds do access funding.

By learning more about the approval criteria for HELOCs, you may be able to navigate the process more easily and improve your odds of getting the financing you seek. Delve into the details here.

What Makes HELOC Approval Easier or Harder?

HELOC approval can be easier or harder depending on such factors as your credit score, the home equity you have built, your income, and the loan-to-value ratio. Strong credentials related to your personal finances and the status of your property can make approval more likely.

In general, HELOC approval is somewhat harder to get than the okay for a first mortgage. That may be due to the fact that, if a borrower defaults, the first mortgage holder gets repaid first, while the second mortgage holder is in a riskier situation.

Typically, it’s considered equally hard to get either a HELOC or a home equity loan. They have similar approval rates.

Recommended: Home Equity Line of Credit for Retirees

HELOC Approval Requirements

How hard is it to get a HELOC? To be approved for a HELOC, certain requirements must be satisfied, like a solid credit score, a certain level of home equity, and a debt-to-income ratio of no more than 43%. Here’s a closer look.

Credit Score

To obtain a home equity line of credit, you likely need a credit score in the mid to high 600s (often 640-680 or higher), with stronger scores (those in the 700s or higher) often unlocking more favorable rates. Your credit score is a reflection of how well you have managed debt in the past, and knowing that number can help lenders manage risk.

Here are the typical brackets for FICO® credit scores, used by 90% of the top U.S. lenders:

•   Exceptional: 800-850

•   Very good: 740-799

•   Good: 670-739

•   Fair: 580-669

•   Poor: 300-579

You can access your credit score for free on a weekly basis at AnnualCreditReport.com (a federally authorized site), via the credit reporting bureaus, and often through your bank and/or credit card company.

Home Equity and Loan-to-Value Ratio

Another factor in the approval of a HELOC is how much home equity you have and the loan-to-value ratio.

•   Home equity: You usually need at least 15% equity in your home in order to be approved for a HELOC. The equity is the difference between the amount owed on your mortgage and the value of your property if you sold it.

If you have a home worth $600,000, and your home loan has $450,000 remaining to be paid, that means your home equity is $150,000. Doing the math, $150,000 is 25% of your home value, indicating that your home equity percentage is high enough to apply for a home equity line of credit.

•   Loan-to-value ratio: Also known as LTV, loan-to-value ratio assesses how much you are financing compared to the value of a property. Lenders use it as one indicator of the risk a borrower poses. Think of it as the other side of home equity coin: You can typically borrow up to 85% of your property value after you’ve deducted the amount remaining on your mortgage.

An example: If you have a property that is worth $600,000 and have a home loan with a balance of $450,000 remaining, your current equity is $150,000. At an 85% LTV, that means the combined debt threshold for the mortgage and HELOC would be 0.85 x 600,000, or $510,000. Since the mortgage has $450,000 remaining to be paid, that means a HELOC of up to $60,000 could be possible.

You may hear lenders use the terms CLTV (combined loan to value) or HCLTV (home equity combined loan to value) ratio when you are applying for financing. This means they are looking at the mortgage and HELOC together to be under the 85% mark. If your mortgage alone represents 85% or more of your home’s value, you may find it challenging to secure a HELOC.

Debt-to-Income Ratio

Is it difficult to get approved for a HELOC when you have a lot of other debts, such as a car payment, a student loan payment, and a hefty credit card balance? Yes. This is because another factor that can determine how hard it is to get a HELOC is your debt-to-income (DTI) ratio. DTI calculates how much of a person’s gross income will be allocated toward debt repayment. As the level of debt rises, repayment can be more challenging, which means more risk for the lender.

Many banks look for a DTI of no more than 43% to qualify for a HELOC, with a limit of 45% being common. Here’s how to do the math:

•   Divide your total monthly debt payments by your gross monthly salary. Then multiply by 100 to get a percentage. To incorporate credit card debt into this equation, use the minimum monthly payment due.

An example: Say that your gross monthly salary is $12,500, and you currently pay $2,000 for your mortgage, $300 for student debt, $150 toward your credit card debt minimum payment, and $350 toward a car loan.

2,000 + 300 + 150 + 350 = 2,800 total monthly debt payments

2,800/12,500 = 0.224

0.224 x 100 = 22.4%, meaning you are likely well under the 43% to 50% DTI threshold for a HELOC.

Income Verification

Another step in getting approved for a home equity line of credit is income verification. In this process, a lender will examine whether your income is adequate to repay the HELOC funds you’d like to borrow. How your income is examined depends on your employment status.

•   For those with traditional income (meaning an employee who receives a steady paycheck), you will usually supply a couple of months’ worth of paystubs, W-2’s and/or federal tax returns for a year or two prior, and possibly confirmation of employment from your employer or a third-party agency.

•   For those who have nontraditional income (such as people who are self-employed), the lender will generally review a year or two of bank statements, 1099s, and your business’s P&L statements, if applicable.

If all this sounds familiar, it’s many of the same criteria you likely encountered when going through the mortgage preapproval process and purchasing your home. For those who would prefer not to supply this kind of information or feel they will not meet the criteria for income verification, some lenders offer no-doc HELOCs, which usually do not require this paperwork. These, however, typically carry considerably less favorable terms. Interest rates may be a few percentage points higher than traditionally documented HELOCs.

Also worth noting: How long it takes to get a HELOC is typically in the range of a few to several weeks, but this varies depending on the lender and your particular situation. If you need to gather many different forms to verify income, it could extend the process.

Recommended: Modifying Your HELOC: Options and Considerations

Common Reasons HELOC Applications Get Denied

Common reasons for HELOC applications to get denied can include a lower credit score or a high DTI ratio, among other factors. Specifically:

•   Credit score below the mid-600s

•   Home equity below the 15% level or LTV above the 85% guideline

•   Debt-to-income ratio above the lender’s limit, which is typically up to 43% to 50%

•   Income verification not possible or annual earnings deemed insufficient to carry the loan

It’s worth mentioning how a HELOC affects your credit score: A hard credit pull is typically part of the process, which can lower your three-digit number by several points temporarily. If you plan to apply elsewhere for a HELOC, you might want to wait a few months. Doing so can allow time for the first hard credit inquiry to drop off your report.

How to Improve Your Chances of Approval

If you are planning to apply for a home equity line of credit, you can take steps that may help you secure approval. Some strategies to try:

•   Strengthen your credit profile. The single largest factor in determining your credit score is timeliness of debt payments, so making sure you are up to date (and stay that way) with sums you owe can be vital.

•   Check your credit report for any errors and disputing any incorrect information.

•   Do not close any credit accounts you are not currently using. Though it may seem counterintuitive, doing so can shorten your payment history and the sum out of which your credit utilization is determined.

•   Avoid applying for additional credit when seeking a HELOC. Each hard credit inquiry can temporarily lower your score by several points, as well as potentially make you appear financially overextended.

•   Calculate your DTI. If it’s above the typical threshold for HELOC approval, work toward paying down the debt that will bring your figure in line with what lenders are seeking. This may take time, but it can be a valuable step toward securing a home equity line of credit.

•   Lower the amount you’re requesting, especially if your LTV percentage with a HELOC would be above the 85% limit. Or you could take time to pay down more of your mortgage’s balance to bring the numbers in line.

•   Explore a cosigner. If your income is not sufficient for approval, consider whether a trusted friend or a family member with a solid income history would be a cosigner on the HELOC. This is a serious undertaking, as the cosigner is legally responsible for the debt. Be sure that a potential cosigner is fully aware of this fact and the potential risks if you were to default.

These methods may help you enhance your chances of approval for a home equity line of credit.

Recommended: What Is a HELOC Freeze or Reduction?

The Takeaway

A HELOC can be a powerful way to leverage the equity in your home, but it can be hard to get approved, with a third of applicants typically being denied. By understanding the key factors lenders look at (such as credit score, LTV ratio, DTI ratio, and income), you may be able to increase your chances of approval. Shopping around with different lenders can also be an important step.

SoFi now offers flexible HELOC options to turn your home equity into cash. Access up to 85% of your home equity, or $750,000, to finance home improvements or consolidate debt. Competitive interest rates and repayment terms up to 20 years could result in lower monthly payments versus other loans. And the online application process is quick and convenient.

Unlock your home’s value with a home equity line of credit from SoFi.

FAQ

What happens if your HELOC application is denied?

If your HELOC application is denied, federal law states that the lender must send you what’s known as an adverse action notice within 30 days, sharing the reasons you weren’t approved. You might then apply for a loan with a lender with less stringent qualifications, work to offset the factors that led to rejection, or try securing an alternative form of funding.

How long should you wait before reapplying for a HELOC?

There is no specific period you need to wait before reapplying for a HELOC. If you believe your credentials can secure funding with a different lender, you could reapply right away. Otherwise, you can work to improve the factors that led to the rejection (such as a too high DTI), which could take anywhere from a few months to considerably longer.

Will a lender check your income for a HELOC?

Yes, typically a lender will check your income for a HELOC, reviewing such documents as tax returns, W-2s, and verifying with your employer or a third-party agency. Those who are not traditional employees may need to submit bank and P&L statements as well as 1099s. That said, some lenders offer no-doc HELOCs that usually don’t require these forms but may charge higher interest rates.

Is it easier to qualify for a HELOC or a home equity loan?

The ease of qualifying for a HELOC or a home equity loan is roughly the same, with differences depending on the lenders’ underwriting process and the specifics of your application. If it is hard for you to get a HELOC, then it will likely be difficult to get a home equity loan as well. Therefore, matching with suitable lenders can be important when seeking funding.

What are some alternatives to a HELOC if you don’t qualify?

If you don’t qualify for a HELOC, you might explore other financing options. Secured options may include home equity loans, cash-out refinance loans, and home equity agreements, while unsecured choices may include personal loans, personal lines of credit, credit cards, and 401(k) loans.

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Photo credit: iStock/AzmanL

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