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in Commerce, CA
Commerce investors and business owners face a common problem: strong income that doesn't show up on tax returns. Both bank statement and DSCR loans solve this, but they work completely differently.
Bank statement loans verify your personal income through deposits. DSCR loans ignore your income entirely and focus on whether the property pays for itself.
Bank statement loans calculate income by averaging 12 or 24 months of business or personal account deposits. Lenders typically use 50% to 75% of those deposits as qualifying income after accounting for business expenses.
You need decent credit (usually 620+) and standard debt-to-income ratios. These work well for self-employed borrowers buying a primary home, second home, or investment property in Commerce.
DSCR loans qualify you based on rental income divided by the property's monthly debt. If the property generates $3,000 in rent and costs $2,400 monthly (PITI), that's a 1.25 DSCR—which most lenders accept.
Your personal income, tax returns, and employment don't factor into approval. The property either cash flows or it doesn't. Credit typically needs to be 640+, and these only work for investment properties.
The biggest difference: bank statement loans care about your income; DSCR loans don't. If you're buying a primary home or need to show personal income, bank statement is your only option. If you're buying a rental, DSCR ignores your tax situation completely.
Rate-wise, DSCR loans often price slightly better because the underwriting is simpler. Bank statement loans require more documentation and manual income calculation, which adds cost. Both typically run 1-3% higher than conventional rates.
Choose bank statement if you're buying a primary residence, second home, or want one loan program for multiple property types. It's also better if your rental income is weak but your business deposits are strong.
Choose DSCR if you're strictly buying rentals and the property cash flows. Your personal tax situation becomes irrelevant, which matters if you write off everything or show minimal income. Most Commerce multi-family investors default to DSCR for this reason.
Yes. You could buy a Commerce duplex with DSCR and your primary home with bank statement. They're separate products with different qualification logic.
Bank statement loans can go as low as 10% down for primary homes. DSCR loans typically require 20-25% down for investment properties.
No. You can close in your personal name or an LLC. The entity structure doesn't affect DSCR approval.
DSCR usually closes quicker. Less income documentation means less back-and-forth with underwriting. Expect 21-30 days vs 30-40 for bank statement.
Absolutely. Many investors refi from bank statement to DSCR once they have rental history, or vice versa if they convert a rental to owner-occupied.