Loading
in Alhambra, CA
Self-employed buyers and investors in Alhambra often hit a wall with conventional loans. Bank statement and DSCR loans both bypass W-2 income verification, but they serve different purposes.
Bank statement loans work for self-employed borrowers buying primary residences or investment properties. DSCR loans are strictly for rental properties and ignore your personal income entirely.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate income. Lenders typically apply a 50% expense factor to your average monthly deposits to determine qualifying income.
You can buy primary homes, second homes, or investment properties with bank statements. Credit scores start at 620, and you'll need at least 10% down for owner-occupied purchases, 15-20% for investment properties.
These work well for 1099 contractors, business owners, and commission-based earners in Alhambra who show strong deposits but can't provide tax returns. The expense factor means you need consistent cash flow to qualify.
DSCR loans qualify you based solely on the rental property's income potential. Lenders divide monthly rent by the monthly mortgage payment to get your debt service coverage ratio.
A DSCR of 1.0 means rent covers the payment exactly. Most lenders want 1.0 or higher, though some accept 0.75 with larger down payments and higher rates.
You can close without providing tax returns, pay stubs, or employment verification. Credit scores start at 640, and down payments range from 20-25% depending on the DSCR and property type.
Bank statement loans look at your cash flow. DSCR loans look at the property's cash flow. That's the fundamental split between these programs.
Bank statement loans let you buy a home to live in or rent out. DSCR loans are investment-only—you can't occupy the property.
With bank statements, your personal deposits determine approval. With DSCR, a market rent appraisal determines approval. You could have zero personal income and still qualify for a DSCR loan if the property cash flows.
Choose bank statement loans if you're self-employed and buying a home to live in. Also use them for investment properties when your personal cash flow is stronger than the property's rental income.
Choose DSCR loans when you're buying rental property and don't want to qualify with personal income. They work especially well for investors with multiple properties or those whose tax returns show low income due to write-offs.
In Alhambra's multi-family market, DSCR loans make sense for 2-4 unit buildings with established rental history. Bank statement loans work better for single-family purchases where you plan to live in the property initially.
Yes, bank statement loans work for investment properties. You'll need 15-20% down and the lender will use your personal bank deposits to qualify you.
DSCR loans typically require 20-25% down for investment properties. Bank statement loans need 15-20% down for rentals, so DSCR often requires slightly more.
Rates vary by borrower profile and market conditions. DSCR rates run 0.25-0.75% higher than bank statement loans in most cases, especially at lower DSCR ratios.
Yes, you can refinance from one non-QM loan to another. Many investors switch to DSCR after converting a primary residence to a rental.
Lenders approve DSCR as low as 0.75 with 25-30% down. Expect higher rates and stricter credit requirements below 1.0.
Either works for bank statement loans. Business accounts often show higher deposits, but personal accounts work fine for 1099 contractors and sole proprietors.