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Insufficient Home Value. While home values have risen in recent years, there are still many homes that are “underwater,” meaning that the total of all mortgage balances exceeds 90% of the home's value. If a homeowner has too little equity in their home, they may not be eligible for a HELOC.

One of the most common reasons for denial is a borrower's lack of sufficient income. Even if a homeowner has significant equity in their home, lenders need to be confident that the borrower has the income to repay the loan.

Applying for a HELOC is similar to applying for any other kind of loan, and will require the borrower to provide the lender with W2s/1099s pay stubs, tax returns, and other documentation. Getting approved for a HELOC also requires a minimum credit score of 620, but again, this requirement will vary by lender.

Full Appraisal Although there are other approaches to getting at home value, this is the technique most often used for home equity loans.

While it's not common, some credit unions or banks might offer a HELOC without a formal appraisal, especially if there have been recent upgrades to your home.

What do I need to bring for a HELOC loan? In addition to a qualifying credit score and sufficient equity, you'll need to provide documentation to verify your income and financial history. This can include recent pay stubs, two years of tax returns, bank statements and a current mortgage statement.

A credit score of 680 or higher will most likely qualify you for a loan as long as you also meet the equity requirements, but a credit score of at least 700 is preferred. In some cases, homeowners with credit scores of 620 to 679 may also be approved.

When you apply for a HELOC, lenders typically require an appraisal to get an accurate property valuation. That's because your home's value—along with your mortgage balance and creditworthiness—determines whether you qualify for a HELOC, and if so, the amount you can borrow against your home.