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in La Habra Heights, CA
La Habra Heights buyers often don't fit conventional loan boxes. Self-employed professionals and real estate investors in this hillside community need lenders who underwrite differently.
Bank statement and DSCR loans both skip tax returns, but they solve different problems. One verifies your personal income through deposits. The other ignores your income entirely and qualifies the property instead.
Bank statement loans use 12 to 24 months of business or personal deposits to calculate income. Lenders apply a multiplier to average monthly deposits, typically 50% for personal accounts or 75% for business accounts.
This works for self-employed borrowers buying primary residences or second homes in La Habra Heights. You need decent credit—usually 620 minimum—and enough deposit history to support your purchase price.
The deposits matter more than what you wrote off. If you show $15,000 monthly deposits but claimed $40,000 income on taxes, the bank statement number is what qualifies you.
DSCR loans don't care what you earn personally. They qualify based on whether the rental property generates enough income to cover its mortgage payment.
Lenders calculate a debt service coverage ratio by dividing monthly rent by the monthly mortgage payment. Most want to see 1.0 or higher, meaning the rent covers the full payment.
This loan only works for investment properties. You can't use DSCR for a home you plan to live in. Credit requirements match bank statement loans—620 minimum in most cases.
Bank statement loans verify you make enough money. DSCR loans verify the property makes enough money. That's the core split.
Bank statement works for any property type you'll occupy or rent. DSCR only works for investment properties you won't live in.
Rates vary by borrower profile and market conditions, but DSCR loans often price slightly better because the rental income is more predictable than personal deposits. Down payment requirements are similar—typically 15% to 25% for both.
Choose bank statement loans if you're buying a primary residence, second home, or investment property and can show strong deposits. This works when your bank statements look better than your tax returns.
Choose DSCR loans if you're buying a rental property and either don't want to verify personal income or your deposits won't support the loan amount. You just need a property with rent that covers the payment.
Some La Habra Heights buyers use both. They'll use a bank statement loan for their personal residence and DSCR loans for their rental portfolio. The strategies stack well together.
Yes, bank statement loans work for investment properties. You verify income through deposits, and the property can be a rental or flip.
No, DSCR loans skip tax returns entirely. They qualify based solely on the property's rental income versus the mortgage payment.
DSCR loans often price slightly better because rental income is more stable. Rates vary by borrower profile and market conditions for both.
Yes, if both spouses are on the loan. Lenders will review bank statements from both borrowers to calculate qualifying income.
Some lenders accept DSCR ratios below 1.0, but you'll pay higher rates. Most prefer 1.0 or higher to ensure the property carries itself.
Yes, expect 6 to 12 months of reserves for either loan. Investment properties usually require more reserves than primary residences.