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in Hercules, CA
Both bank statement and DSCR loans bypass W-2 income verification, but they serve different borrower types. One proves income through your business deposits. The other qualifies you on rental cash flow alone.
Hercules investors and self-employed buyers often hit walls with conventional loans. These two non-QM options open doors when tax returns don't tell the full story of your finances.
Bank statement loans use 12 to 24 months of business or personal bank deposits to calculate income. Lenders apply a percentage to your average monthly deposits, typically 50% to 75% depending on business structure.
This works for self-employed Hercules buyers who write off most income but have strong cash flow. You need 10% to 20% down, 620+ credit, and consistent deposits. Rates run 1% to 2% higher than conventional loans.
DSCR loans qualify you solely on the rental property's income versus its debt payments. If the property generates enough rent to cover the mortgage plus expenses, you're approved. Your personal income doesn't matter.
You need the property to hit a DSCR of at least 1.0, meaning rent equals or exceeds the housing payment. Most lenders prefer 1.25 for better rates. Expect 20% to 25% down and 660+ credit for competitive pricing.
Bank statement loans require proving your business income exists. DSCR loans don't care about your income at all. One qualifies you as a borrower. The other qualifies the property as an investment.
Down payments differ slightly—bank statement loans can go as low as 10% on owner-occupied homes, while DSCR loans start at 20% since they're investment-only. Credit score floors are similar, but DSCR lenders are stricter about property condition and rent documentation.
Choose bank statement loans if you're self-employed and buying a home to live in. They also work for investors who want one loan program for both personal and rental properties. You'll need solid deposit history showing regular business income.
Pick DSCR if you're purely an investor who doesn't want to document personal income. This is the move when you're buying a turnkey rental in Hercules and the numbers work on paper. The property carries the loan, not your 1040.
No. DSCR loans are investment property only. If you plan to occupy the home, you need a bank statement loan or another owner-occupied program.
It depends on your DSCR ratio and deposit strength. Strong DSCR above 1.25 often beats bank statement pricing. Rates vary by borrower profile and market conditions.
Yes. Both programs offer cash-out refis. DSCR loans often allow higher LTV on investment property cash-outs than conventional loans do.
Absolutely. Use bank statement for your primary residence and DSCR for rentals. We structure this for Hercules investors regularly.
DSCR loans typically close quicker. No personal income documentation means fewer moving parts. Bank statement loans need more underwriting time to verify deposits.