Warehouse Line of Credit Requirements for Private and Hard Money Lenders
Warehouse lenders look at net worth, liquidity, track record, audited financials and eligible collateral. Here is what published programs and filings require.
Why it matters
- Published bank programs set minimums for tangible net worth, liquidity and years in business, and usually require personal guarantees from owners.
- Warehouse agreements also require regular financial statements, fidelity and errors and omissions insurance, and ongoing covenants on net worth, liquidity and leverage.
- For private business-purpose lenders, an American Association of Private Lenders guide says a warehouse facility typically requires at least $50 million of annual originations.
Explainer: background on how this part of the market works.
To qualify for a warehouse line of credit, a lender typically needs a minimum tangible net worth, cash liquidity, a track record of closing and selling loans, regular financial statements, insurance, personal guarantees from its owners and loans that fit the line's collateral rules. Exact thresholds vary by provider. For private and hard money lenders, an industry guide published by the American Association of Private Lenders says volume matters most: a warehouse facility "typically" requires at least $50 million of annual originations.
This guide sets out the requirements published by warehouse providers and disclosed in public filings. For how the line itself works, see our complete guide to the warehouse line of credit.
Requirements below are examples from named sources, not a standard. Each provider sets its own terms. Nothing here is financial or legal advice.
Published warehouse line requirements at a glance
| Requirement | Published example | Source |
|---|---|---|
| Tangible net worth | At least $500,000 | First Horizon Bank |
| Time in business | At least three years | First Horizon Bank |
| Liquidity | Higher of $100,000 or a percentage of average loan size; line up to 20 times corporate liquidity | Simmons Bank |
| Liquidity covenant | 5% of the approved line | First Horizon Bank |
| Personal guarantee | Owners (First Horizon); anyone owning 10% or more (Simmons) | First Horizon, Simmons |
| Financial statements | Two to three years of statements and tax returns | Customers Bank |
| Insurance | $300,000 fidelity bond and $300,000 errors and omissions policy | Simmons Bank |
| Origination volume (private lenders) | Typically at least $50 million a year | AAPL guide by Mark Jury |
| Minimum line size | From $2 million (Simmons); $3 million (First Horizon); $5 million (Customers Bank) | Provider websites |
What net worth do you need for a warehouse line?
It depends on the provider. First Horizon Bank, which serves independent mortgage bankers, says applicants "must have a minimum of $500,000 tangible net worth." Mark Jury, writing in the American Association of Private Lenders' Private Lender magazine in March 2026, says warehouse facilities for private lenders have "no formal balance sheet minimum" beyond funding the part of each loan the line does not advance. By contrast, he says, balance sheet revolving lines generally require a private capital base of at least $10 million to $20 million.
Net worth also becomes an ongoing test. Velocity Financial, a public business-purpose lender, says its warehouse facilities require it to keep a minimum net worth and a maximum debt-to-net-worth ratio. Better Home & Finance lists minimum tangible net worth among its warehouse covenants.
Lenders that sell to Fannie Mae face a separate floor. Fannie Mae's Selling Guide requires approved seller/servicers to keep an adjusted net worth of at least $2.5 million plus a percentage of the loans they service.
How much liquidity do warehouse lenders require?
Simmons Bank sets minimum liquidity at the higher of $100,000 or a percentage of average loan size, counting corporate cash, marketable securities or unrestricted guarantor assets, and sizes lines at up to 20 times corporate liquidity. First Horizon's liquidity covenant is 5% of the approved line.
Liquidity also has to cover the haircut, the part of each loan the line does not fund, plus any margin calls. Velocity says it may need more working capital if loans become delinquent, because the amount its facilities will finance can change with the collateral's performance.
Do you need a track record?
Usually. Customers Bank says lenders "want to see demonstrated experience originating and closing loans," along with reliable channels for selling or securitizing them, such as investor commitments, agency approvals or correspondent relationships. First Horizon asks for three years in business and a track record of profitability. Simmons Bank says startup lenders may qualify, subject to underwriting and liquidity requirements.
For private lenders, the buyer relationship may matter as much as history. Jury writes that warehouse lines for business-purpose loans come mostly from "institutional loan buyers/aggregators" and a few non-banks, and that the provider often holds a right of first refusal on the loans.
What financial statements are required?
Expect annual statements, sometimes audited, plus interim reports. Customers Bank says lenders typically ask for "two to three years of business financial statements and tax returns." Simmons Bank requires quarterly GAAP-quality financial statements. A 2017 master repurchase agreement between Sterling National Bank and M/I Homes' mortgage subsidiary, filed with the SEC, required annual statements with an unqualified opinion from an approved accountant within 90 days of year-end and quarterly statements within 30 days of quarter-end.
Does a warehouse line require a license?
A warehouse line does not replace the capital a state license may require. Maryland's Commissioner of Financial Regulation said in a 2017 advisory that warehouse lines "are not eligible to be used toward satisfying the minimum net worth requirement" for mortgage lender licensees, because the line can be used only to fund loans. Licensing rules for business-purpose lenders vary by state, so lenders should confirm what applies to them.
What operational controls do warehouse lenders check?
- Systems and reporting. Customers Bank says providers assess systems for loan-level reporting and for tracking draws and payoffs.
- Insurance. Simmons requires a fidelity bond and an errors and omissions policy. The M/I Homes agreement required the warehouse bank to be named as loss payee on both.
- Collateral and servicing. Velocity says borrower payments on loans financed under its warehouse facilities go into pledged accounts with the loan servicer. The M/I Homes agreement required the bank to be registered as "warehouse lender" on MERS and allowed it to re-underwrite loans, including ordering broker price opinions and new appraisals.
- Quality and salability. The OCC's Comptroller's Handbook says whether a loan can be sold depends on whether it "meets investor underwriting, documentation, and operational guidelines," and that loans sitting too long may reflect underwriting, documentation or delinquency problems.
Which loans are eligible collateral?
Each line lists the loans it will finance. Simmons Bank accepts agency, government, jumbo and non-QM loans, lists second liens, construction, bridge, HELOC and reverse mortgages as ineligible, and says it does "not provide warehouse financing for hard money loans." First Horizon lists conforming, reverse, government and jumbo loans, and says other loan types "may be acceptable." Velocity says its facilities are collateralized primarily by performing loans. The M/I Homes agreement set a concentration limit for each approved product.
Jury notes a fit problem for fix-and-flip lenders: residential transition loans, given their short maturities, "do not naturally align with traditional warehouse structures."
What if you do not qualify yet?
Jury writes that lenders with balance sheets under $10 million to $20 million and less than $50 million of annual originations have few leverage options "beyond perhaps relationships with a local community bank," and suggests they focus on raising private capital and brokering or white-labeling excess volume. Our guide to alternatives to a warehouse line for emerging lenders compares those options. For a quick definition, see What Is Warehouse Lending?, and find more funding coverage in the capital section.
Sources
- Mark Jury, American Association of Private Lenders, Build Scale with the Right Debt Instruments (March 18, 2026)
- First Horizon Bank, Warehouse Lending: Qualifying Requirements
- Simmons Bank, Warehouse Lending
- Customers Bank, How to Get a Warehouse Line of Credit (updated September 2026)
- Velocity Financial, Inc., Form 10-K for 2024
- Better Home & Finance Holding Co., Form 10-K for 2025
- M/I Homes, Inc., Second Amended and Restated Master Repurchase Agreement between Sterling National Bank and M/I Financial, LLC (Oct. 30, 2017)
- Fannie Mae, Selling Guide A4-1-01: Maintaining Seller/Servicer Eligibility (Aug. 5, 2026)
- Maryland Commissioner of Financial Regulation, Advisory: Use of Warehouse Line of Credit to Satisfy the Mortgage Lender Net Worth Requirement (PDF) (Oct. 23, 2017)
- Office of the Comptroller of the Currency, Comptroller's Handbook: Mortgage Banking (PDF) (Version 1.0, February 2014; reputation-risk references removed March 20, 2025)
