How to Get a HELOC With Low Income

by Ray Cole ; Updated July 27, 2017
You might qualify for a HELOC with limited earnings.

You may qualify for a home equity line of credit, or HELOC, even if your primary source of income stems from retirement earnings. The primary factors used by most lenders to determine an applicant’s risk level are the equity within the borrower’s home, the borrower’s credit score and the ability of the borrower to afford the HELOC. You will be required to qualify for the monthly payment associated with a completely used credit line, based on the prevailing interest rates. A HELOC provides revolving credit terms, which are similar to a credit card. Your monthly payment will be assessed in relation to your outstanding principle balance. The application process is fairly simplistic for a HELOC.

Step 1

Verify your consumer payment history and credit score. Get an updated credit report to ensure that all of your obligations are paid to date, prior to applying for a HELOC. Order your credit profile from annualcreditreport.com to check the accuracy of your credit data. Submit a dispute online for objectionable items, along with documents that serve as proof of your claim. Ensure that your credit score is above 720 to increase your possibility of qualifying for a HELOC.

Step 2

Locate your income tax records for the past two years, recent bank statements, pay stubs and proof for all regular forms of income.

Step 3

Take your income documents to your bank to apply for a HELOC. Give permission to a lending officer to perform a credit check and review of your income documents.

Step 4

Discuss your qualifications with the loan officer. Inquire about a smaller HELOC if your low income prohibits you from qualifying for the amount you requested. For instance, if you apply for a $25,000 HELOC and get declined, due to low income, ask about your ability to get a $10,000 HELOC.

Step 5

Contact other banks or mortgage lenders to inquire about a HELOC. Use information obtained from your bank, such as your credit score and qualifying monthly income, to shop online and at other local banks for a HELOC.

About the Author

Ray Cole has written professionally since 1999 and has designed dozens of Web sites. Cole writes for eHow and "SF Gate." As a small business owner for over 15 years, he provides mortgage services, credit-related help and financial planning for his clients. Cole is currently writing a book about personal finance. He has also studied and taught martial arts for over 31 years.

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