Loading
in McFarland, CA
McFarland investors and self-employed borrowers often find traditional mortgage qualification challenging. Bank Statement and DSCR loans offer alternative paths to financing without W-2 income verification.
Both are non-QM (non-qualified mortgage) products designed for borrowers who don't fit conventional lending boxes. The right choice depends on whether you're buying a primary residence or investment property, and how you want to verify your ability to repay.
Bank Statement loans use 12 to 24 months of personal or business bank statements to calculate income. Lenders review deposits to determine your qualifying income, typically applying a percentage after accounting for business expenses.
These loans work well for self-employed McFarland residents, business owners, and freelancers who write off significant expenses. You can purchase a primary residence, second home, or investment property using this income verification method.
Credit requirements are typically 620 or higher, with down payments starting around 10-15% for owner-occupied properties. Rates vary by borrower profile and market conditions, but expect pricing above conventional loans.
DSCR loans qualify you based solely on the rental property's income potential, not your personal income. The lender calculates the Debt Service Coverage Ratio by dividing monthly rental income by the monthly mortgage payment.
These loans are strictly for investment properties in McFarland and throughout Kern County. Your personal income, employment status, and tax returns don't factor into approval—only the property's ability to cover its own debt.
A DSCR of 1.0 or higher means the rent covers the mortgage payment. Many lenders require 1.0-1.25 DSCR, with down payments typically 20-25%. No income documentation needed, making the process simpler for investors with multiple properties.
The fundamental difference is what qualifies you. Bank Statement loans examine your personal or business income through deposits. DSCR loans examine the rental property's income against its mortgage obligation.
Property type matters significantly. Bank Statement loans work for any property you'll occupy or rent out. DSCR loans only finance investment properties—you cannot use one for a McFarland home you plan to live in.
Documentation requirements diverge sharply. Bank Statement loans require months of statements and potentially business documentation. DSCR loans skip personal financials entirely, focusing on lease agreements or market rent analysis instead.
Choose Bank Statement loans when buying a primary residence in McFarland or when your personal income qualifies you but appears lower on tax returns due to business deductions. Self-employed borrowers with consistent deposits benefit most from this approach.
Choose DSCR loans when building a rental portfolio and the property's rent covers the payment. Investors with multiple properties, those with complicated tax situations, or retirees living off assets prefer this no-income-verification route.
Your situation might allow either option for McFarland investment properties. Consider which documentation you have readily available and whether you want your personal finances scrutinized. Some investors prefer DSCR's simplicity, while others have stronger personal income than rental income.
Yes, Bank Statement loans work for investment properties, primary residences, and second homes. DSCR loans only finance investment properties, giving Bank Statement loans more flexibility in property type.
Rates vary by borrower profile and market conditions. Neither consistently offers lower rates—pricing depends on your credit, down payment, property type, and current market factors.
Bank Statement loans typically don't require tax returns, using bank statements instead. DSCR loans never require your personal tax returns, focusing entirely on property income documentation.
DSCR loans often close faster because they skip personal income verification entirely. Bank Statement loans require reviewing 12-24 months of statements, which adds underwriting time.
Both loan types offer refinance options for McFarland properties. Bank Statement refinances work for any property you own, while DSCR refinances apply only to investment properties.