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in Lomita, CA
Lomita investors and self-employed borrowers hit the same wall with conventional loans: income verification. Bank statement and DSCR loans solve different problems despite both being non-QM products.
One proves your personal earning power through deposits. The other ignores your income entirely and bets on the rental property's cash flow. Most borrowers need one or the other — rarely both.
Bank statement loans use 12 to 24 months of business or personal deposits to calculate income. Lenders apply a percentage to your average monthly deposits — typically 50% to 75% depending on your business structure.
You still qualify based on debt-to-income ratio, just like a conventional loan. The difference is how lenders calculate that income number. This works when you earn strong revenue but write off most of it on tax returns.
DSCR loans ignore your personal income completely. Lenders divide the property's monthly rental income by its monthly debt obligations. A ratio above 1.0 means the rent covers the mortgage — that's typically enough to qualify.
Your job, business income, and tax returns don't matter. The property either cash flows or it doesn't. Most lenders want DSCR of 1.0 or higher, though some programs go down to 0.75 with larger down payments.
The main split is what gets underwritten. Bank statement loans underwrite you — your deposits, your DTI, your ability to repay. DSCR loans underwrite the property's rental income and nothing else.
Down payment requirements differ too. Bank statement loans often start at 10-15% down for primary homes. DSCR loans typically need 20-25% because they're investment-only products. Credit score minimums run similar — both usually want 620 or higher.
Use bank statement loans when you're self-employed and buying a home to live in. They work for investment properties too, but only if you want your personal income considered. If you have strong deposits but low taxable income, this is your path.
Choose DSCR when you're buying pure rental property and want to skip income docs entirely. The property needs strong rental numbers to qualify. This works especially well for borrowers with multiple investments who don't want each new purchase to strain their personal DTI.
Yes, but DSCR makes more sense for pure rentals. Bank statement works if you need personal income counted for some reason.
Neither requires tax returns for income verification. DSCR lenders may request them to confirm you filed, but they don't calculate income from them.
Rates vary by borrower profile and market conditions. Both price similarly as non-QM products — typically 1-2% above conventional rates.
Technically yes, but you'd use one or the other per property. No reason to provide bank statements if the rental income already qualifies.
Both typically require 620 minimum. Some lenders go down to 600 with larger down payments and compensating factors.