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in Firebaugh, CA
Both bank statement loans and DSCR loans bypass traditional W-2 income verification. The difference is what replaces it—your personal cash flow or a property's rental income.
Firebaugh borrowers choosing between these options need to understand which income source gets them better terms. Most self-employed buyers lean toward bank statements while investors prefer DSCR.
Bank statement loans use 12 or 24 months of business or personal bank deposits to calculate your qualifying income. Lenders apply an expense factor—typically 25% to 50%—then use what's left to determine your borrowing power.
This works for Firebaugh business owners, contractors, and 1099 earners who write off substantial expenses on tax returns. You need decent credit, typically 620 minimum, and expect 10% to 20% down depending on the property type.
Rates run higher than conventional loans but lower than hard money. You prove income through deposits, not tax returns, which means your write-offs don't hurt your approval.
DSCR loans qualify you based on a rental property's income, not yours. Lenders divide the monthly rent by the total monthly payment—principal, interest, taxes, insurance, and HOA. A ratio above 1.0 means the property covers its own costs.
Most lenders want to see 1.0 to 1.25 DSCR depending on credit score and down payment. You can buy investment properties in Firebaugh without proving personal income, tax returns, or employment.
These loans require 20% to 25% down for single-family rentals. Your credit score matters more than with bank statement loans—expect minimums around 640 to 680 depending on the lender.
Bank statement loans qualify you based on your business or personal cash flow. DSCR loans ignore your income entirely and focus on the property's rental performance.
Down payment requirements differ—bank statements can go as low as 10% for primary residences while DSCR loans start at 20% for investment properties. Credit standards are stricter on DSCR, typically requiring 640 minimum versus 620 for bank statements.
The property purpose matters most. Bank statement loans work for primary homes, second homes, or investment properties. DSCR loans only finance investment properties with rental income.
Choose bank statement loans if you're buying a home to live in or your rental property doesn't generate strong enough income to hit 1.0 DSCR. Self-employed Firebaugh buyers purchasing primary residences default to bank statements since DSCR doesn't allow owner occupancy.
DSCR makes sense for investors buying cash-flowing rentals who don't want to document personal income. If the property rents for enough to cover its payment, your tax returns and business deposits don't matter.
Some investors use both loan types across different properties. A contractor might use bank statements for their personal home and DSCR for a rental property in town.
Yes, bank statement loans work for rentals. You'll need 15% to 25% down depending on credit and property type.
Monthly rent must equal or exceed your total monthly payment. Most lenders require 1.0 to 1.25 times the payment amount.
Rates vary by borrower profile and market conditions. DSCR loans often price slightly better with strong credit and higher DSCR ratios.
No. Bank statement loans use deposits, and DSCR loans use rental income. Neither requires personal tax returns for qualification.
Yes. DSCR works for both purchases and refinances on investment properties with documented rental income.