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in Lancaster, CA
Lancaster investors and self-employed borrowers face the same W-2 income problem: traditional lenders won't approve them. Bank statement loans and DSCR loans both skip tax returns, but they solve different problems.
Bank statement loans work for owner-occupied properties when you're self-employed. DSCR loans work for rental properties regardless of how you earn income. Choose wrong and you'll waste weeks on a deal that won't close.
Bank statement loans pull income from 12 or 24 months of business or personal bank deposits. Most lenders use 50% of your average monthly deposits as qualifying income. You need 10-20% down and 620+ credit.
This program works for contractors, real estate agents, business owners buying a primary home or second home. Lancaster has plenty of self-employed buyers in construction and aerospace who can't document income on a 1040. If you're buying a rental, this isn't your loan.
DSCR loans ignore your personal income completely. Lenders divide monthly rent by monthly mortgage payment to get your debt service coverage ratio. You need 1.0 or higher to qualify, though 1.25 gets better rates.
This loan exists for rental property investors who don't want to prove personal income. You can close in your LLC name. Down payment starts at 20-25%. Lancaster rental homes averaging $2,200-$2,500 monthly rent work well if your mortgage stays under that number.
Property use is the biggest split. Bank statement loans require you to live in the property. DSCR loans require you to rent it out. Rates vary by borrower profile and market conditions, but DSCR rates typically run 0.5-1% higher than bank statement rates.
Income documentation separates them completely. Bank statement loans dig into your deposits and business expenses. DSCR loans never ask for bank statements or tax returns. They order an appraisal, get a rent schedule, and divide rent by payment.
Use bank statement loans when you're self-employed and buying a home to live in. Use DSCR loans when you're buying a rental property and don't want to document personal income. The property type decides the program.
Most Lancaster investors buying single-family rentals use DSCR loans because they're simpler. Self-employed buyers moving to Lancaster from LA or OC use bank statement loans. We run scenarios with both programs to see which gets approval. Property use determines eligibility before rates matter.
No. Bank statement loans only work for primary homes and second homes. Investment properties require DSCR loans or other investor programs.
Bank statement loans typically price 0.5-1% lower than DSCR loans. Rates vary by borrower profile and market conditions.
No. DSCR loans skip tax returns and bank statements completely. Lenders only verify the rental property generates enough income to cover the mortgage.
Both programs start at 620 minimum credit score. Scores above 680 get better rates and more lender options.
Yes. DSCR loans allow LLC ownership, which bank statement loans don't. Most investors prefer closing in an entity for liability protection.