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in Fresno, CA
Fresno's self-employed borrowers and real estate investors face the same problem: traditional W-2 income verification doesn't work. Bank statement loans and DSCR loans both solve this, but they're built for completely different scenarios.
One qualifies you based on your business deposits. The other ignores your income entirely and underwrites the property instead. Understanding which tool to use determines whether you get approved or waste time chasing the wrong loan.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits to calculate qualifying income. Lenders apply a percentage factor to your average monthly deposits—typically 50% for business accounts, 100% for personal.
This works for contractors, real estate agents, consultants, and anyone whose Schedule C shows legitimate income but aggressive write-offs. You need 10-20% down, 620+ credit, and statements that show consistent cash flow without frequent NSFs or overdrafts.
We see these used most in Fresno for primary residence purchases. If you're buying the home you'll live in and run a business, this is your path to qualifying without tax returns.
DSCR loans qualify based on one number: the ratio between monthly rent and monthly debt service. If the property generates $2,000 rent and the mortgage payment is $1,600, your DSCR is 1.25. Most lenders want 1.0 or higher.
Your personal income doesn't matter. Your tax returns don't matter. The underwriter evaluates the property's rental income using a market rent analysis or existing lease, then compares it to the proposed mortgage payment.
Fresno investors use DSCR loans to build portfolios without hitting DTI limits. You can own 10 properties financed this way because none of them count against your personal debt ratio. Expect 15-25% down and 640+ credit.
The fundamental split: bank statement loans underwrite you as a borrower, DSCR loans underwrite the property as an asset. Bank statements require proof of personal or business cash flow. DSCR requires proof the rent covers the debt.
Credit and down payment differ slightly. Bank statement loans start at 620 credit with 10% down for strong profiles. DSCR loans typically require 640 credit and 20% down, though some lenders go to 15% at higher rates.
Occupancy is the dealbreaker. Bank statement loans work for primary residences and second homes. DSCR loans are investment property only—you cannot live in a DSCR-financed property. Choose the wrong product and the deal dies at underwriting.
Use bank statement loans if you're buying a home to live in and your tax returns don't reflect your true income. This is the right choice for Fresno business owners purchasing primary residences or second homes who show strong deposits but low taxable income.
Use DSCR loans if you're buying or refinancing rental property and want to avoid personal income verification. This fits investors adding to existing portfolios, borrowers with complex income structures, or anyone buying a property that generates enough rent to cover the mortgage.
We see bank statement loans close faster because there's less appraisal scrutiny on rent potential. DSCR loans take longer since underwriters need market rent analysis, but they scale better for multi-property investors.
Some lenders allow it, but DSCR is cleaner for rentals. Bank statement loans on investment property require higher reserves and rates than DSCR options.
You can still qualify with 0.75-1.0 DSCR if you put 25-30% down. Rates increase as DSCR drops below 1.0, and credit requirements tighten.
Bank statement loans skip tax returns entirely. DSCR loans sometimes request them for reserves verification but don't use them for income qualification.
Rates vary by borrower profile and market conditions. DSCR typically runs 0.25-0.5% higher than bank statement loans due to investment property risk pricing.
Yes, if the property use changes. Primary to rental property works for DSCR refinance. Rental to primary residence could work for bank statement refinance.