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in Lawndale, CA
Both bank statement and DSCR loans serve Lawndale borrowers who can't qualify through traditional W-2 income verification. The difference comes down to how you make money—active business income versus rental property cash flow.
Most self-employed borrowers in Lawndale default to bank statement loans without considering DSCR. That's a mistake if you're buying investment property, since DSCR loans don't care about your tax returns or business structure.
Bank statement loans use 12 to 24 months of personal or business account deposits to calculate qualifying income. Lenders average your deposits and apply an expense factor—typically 50% for personal accounts, 25% for business accounts.
This works well for Lawndale contractors, real estate agents, or consultants who write off most income. You need at least 12 months of self-employment history and typically 10-20% down depending on credit score.
Credit requirements start around 620, though 680+ gets better pricing. Unlike conventional loans, lenders won't scrutinize every business expense or ask for two years of tax returns showing steady income.
DSCR loans qualify you based solely on a rental property's projected income versus its monthly debt. If the property generates enough rent to cover the mortgage, taxes, insurance, and HOA fees, you're approved—regardless of your W-2 or business income.
The debt service coverage ratio needs to hit 1.0 or higher for most programs. That means the rent covers 100% of the property expense. Some lenders go down to 0.75 DSCR with larger down payments.
These loans only work for investment properties in Lawndale—you cannot use DSCR for a primary residence. Most programs require 20-25% down and don't verify personal income, employment, or debt-to-income ratios at all.
The biggest split is property use. Bank statement loans work for your Lawndale home or a rental property. DSCR loans only finance rentals—single-family, multi-unit, condos, anything that generates rent.
Income verification also differs completely. Bank statement loans still verify your personal earning capacity through deposits. DSCR loans ignore your income entirely and focus on whether the property pays for itself.
Down payment requirements overlap but DSCR typically runs higher. You might get 10% down on a bank statement loan with strong credit. DSCR programs rarely go below 20%, and most lenders want 25% to get competitive rates.
Use bank statement loans if you're buying a home to live in or need to qualify across multiple Lawndale properties. They're also better for newer investors who want to use rental income plus business income to qualify.
Choose DSCR if you're purely acquiring investment property and want zero personal income verification. This works well for W-2 earners with high debt-to-income ratios, retirees buying rentals, or foreign nationals investing in Lawndale real estate.
Rates vary by borrower profile and market conditions. Both loan types typically price 0.5-1.5% higher than conventional mortgages, with exact rates depending on credit score, down payment, and property type.
Yes. Bank statement loans work for both primary residences and rental properties. DSCR loans only finance rentals.
DSCR loans require less. You skip tax returns, pay stubs, and income verification entirely—just property appraisal and lease agreements.
No. Bank statement loans need self-employment history. DSCR loans work for W-2 earners, retirees, or anyone buying investment property.
Both typically start around 620 minimum. Scores above 680 unlock better rates and lower down payment options.
Yes. Borrowers often refinance from bank statement to DSCR once rental income stabilizes, or vice versa when converting to owner-occupied.