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in Ione, CA
Ione's investment properties and self-employed business owners need alternatives to traditional W-2 financing. Both bank statement and DSCR loans skip tax returns, but they verify ability to repay in completely different ways.
Bank statement loans look at your personal cash flow through deposits. DSCR loans ignore your income entirely and qualify you based on what the rental property generates. Same goal, opposite approach.
Bank statement loans use 12 or 24 months of business or personal bank deposits to calculate income. Lenders apply a percentage (typically 50-75%) to your average monthly deposits to determine qualifying income.
This works for contractors, small business owners, and anyone with strong cash flow that doesn't show up cleanly on tax returns. You still need decent credit—usually 620 minimum—and 10-20% down depending on the property type.
The catch: lenders scrutinize deposits for one-time windfalls or transfers between accounts. Consistent monthly flow matters more than occasional large deposits. Rates run 1-2% higher than conventional loans.
DSCR loans qualify you based exclusively on rental income divided by the property's monthly debt obligations. The lender never asks for your tax returns, pay stubs, or employment history.
A DSCR of 1.0 means rent covers the mortgage payment exactly. Most lenders want 1.0 or higher, though some go down to 0.75 if you bring more money down. This works for investors buying or refinancing rentals in Ione.
You cannot use DSCR for primary residences or second homes. Investment property only. Credit requirements start around 640, and you typically need 20-25% down.
Bank statement loans care about your personal cash flow. DSCR loans care about the property's cash flow. If you're buying to live in the home, only bank statement works. If you're buying purely as an investor, DSCR is usually cleaner.
Bank statement programs require more documentation—all those statements, explanations for large deposits, business license verification. DSCR is simpler: appraisal, rent schedule or lease, property details. No personal financial deep dive.
Rates vary by borrower profile and market conditions. Generally, DSCR rates run slightly higher than bank statement rates because lenders view rental income as less stable than personal deposits. Both cost more than conventional loans.
Choose bank statement loans if you're buying a primary residence or vacation home in Ione and you're self-employed. Also works for investors who want flexibility to use the property themselves occasionally.
Choose DSCR if you're a pure investor who will never live in the property. Especially useful if your personal tax returns show low income due to write-offs, or if you don't want to share personal financials with lenders.
Some borrowers qualify for both but prefer DSCR for speed and privacy. Others need bank statement because they're buying to live there. Match the loan to how you plan to use the property, not just which sounds easier.
Yes. You can have a bank statement loan on your primary home and DSCR loans on rental properties. Lenders evaluate each loan independently based on the property use.
Bank statement loans typically price slightly better than DSCR. Both run 1-2% higher than conventional financing. Rates vary by borrower profile and market conditions.
Some lenders allow short-term rentals under DSCR using projected income. Bank statement programs generally require long-term leases. Ask your broker which lenders support Airbnb scenarios.
DSCR usually closes quicker because there's no personal income documentation. Bank statement loans take longer due to deposit analysis and underwriting complexity. Expect 30-45 days for either.
You can refinance into a DSCR loan if you convert the property to a rental. Moving from DSCR to bank statement requires showing it's now owner-occupied, which triggers different rules.