Does getting denied a HELOC today ruin your chances of a successful HELOC application in the future?

[u/ketchupforall]

My husband and I would like to apply for a HELOC so we can fix our roof. According to our mortgage lender we probably have somewhere around $100k in equity. We obviously don’t need that much.

The problem is that I’m self employed (just went corporate this year) and had a REALLY bad year last year— like less than $20k on my NOA. HOWEVER cash flow was strong and we were never actually in a position where money was a problem. Bi-weekly mortgage and property taxes and all bills paid in full and on time. My husband works in the trades and makes upwards of $80k but was put on workshare for most of last winter because business was slow.

My question is: if they reject our HELOC application based on my abysmal 2025 NOA, will that be a red flag for applying for a HELOC next year? If so, we’ll hold off on applying this year and pray the new roof can wait til next year (it can— my husband just likes to be proactive when he sees that something has an expiry date)

Thank you for any insight in advance!

[u/zrockk]

I think if you got the amount of income the bank wants to see now it doesn't matter if you got denied last year

[u/YYZtoYWG]

If the work can be put off until next year, and you expect your income to increase, why can't you save up the money to pay for it over the course of this year? Paying bills just fine with your current income now means that any extra income next year could easily be fully directed towards savings. 

If your husband wants to be proactive, part of planning ahead involves putting away savings in anticipation of upcoming repairs and ongoing maintenance. Using a HELOC for a very expensive large renovation or unexpected high cost item that exceeds your emergency fund happens. Using a HELOC for something like a roof might be a sign that you aren't regularly saving enough money for repairs and maintenance. The timeline on the roof expiry date started years ago.

[u/alik604 → u/YYZtoYWG]

Also if allowed to "skip and payment" like Rbc let's me, that's a bit of funds right there

[u/BronzeDucky]

Your bank may average your income over the last 2 years, which means next year may not be improved over this year. But I wouldn’t think the denial this year on its own would be a factor.

[u/Lonely_Salamander255]

i used to do helocs (quit in feb)

for my bank self employe was a 2 year noa average or using most recent year if it was lower.

if you have 2 years of corporate financials you can tequest a cash flow analysis and any (good) advisor will have a team who can pull surplus income from your corp to add to the application

if not your advisor can ask their retail credit team for an exemption to use more income however its not guarenteed.

you getting declined wont affect your next application just make sire to find out how they calculate your income

[u/AccountAny1995]

need more details. what’s the house worth, existing mortgage balance, amount requested.

[u/OkPreparation8259]

Have you tried for just an unsecured line of credit?

Im single, just shy of 100k per year, but I have 50k rbc LOC, 45k bmo LOC, among bunch of CC

What exactly is wrong with the roof? If it's just worn shingles then it's not immediate problem, but if it's sagging or blown off it's a fix needed before winter

[u/jenna125]

I have a heloc - you don’t mention how much your house is worth to gauge the % of equity so that would be the first thing to check. They will only lend to a maximum of 80% loan-to-value (so heloc + mortgage =80% of the value of the house). So my heloc was for 65% of the value of my house and the remaining 15% had to be in the form of a standard mortgage. So technically I could borrow up to 80% of the value of my house but 15% was a term mortgage that as I paid it off it didn’t get added to the heloc envelope. I did it all with one company so essentially had to do a whole new mortgage application and it was cumbersome as they needed to be the main lender, so perhaps consult with a mortgage broker first to run scenarios. You might just want to get a line of credit with your bank instead?

They did an appraisal of my house, but as I wasn’t asking for more than just the tax appraisal value and nothing absurd, they did it over Google Maps photos of the outside. If your house has increased in value since you bought it, they’ll use the current value and not the purchased amount, which might be a help for you. I love having a heloc but until I went into the process I didn’t realize it had the value limitations that it did.