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in Los Angeles, CA
Los Angeles has one of the country's largest self-employed populations and most active rental markets. That creates massive demand for loans that don't require W-2s or traditional income verification.
Bank statement and DSCR loans both solve the income documentation problem. But they work for completely different scenarios and borrower types.
Bank statement loans analyze 12 to 24 months of your business or personal bank deposits. Underwriters calculate monthly income by averaging those deposits and applying an expense ratio of 25% to 50%.
This option works for self-employed borrowers buying a primary residence, second home, or investment property. You need consistent deposits that demonstrate income sufficient to cover the new mortgage payment.
DSCR loans ignore your personal income entirely. They qualify you based on the rental property's current or projected rent compared to the monthly debt on that property (mortgage, taxes, insurance, HOA).
A DSCR of 1.0 means the rent exactly covers the property expenses. Most lenders want 1.0 or higher, though some go down to 0.75 if you bring a larger down payment.
The fundamental split is property use. DSCR loans only work for rental properties you won't occupy. Bank statement loans work for any property type if you can show income through deposits.
DSCR loans care exclusively about the property's rental income versus its debt. Bank statement loans care about your total income from all sources and your total debt load across all properties.
Use a DSCR loan when buying a rental property and you want the simplest approval process. No tax returns, no employment verification, no explanation of business income fluctuations. Just an appraisal with a rent schedule.
Use a bank statement loan when buying a home you'll live in or when your rental property won't cash flow on day one. Bank statement loans also work better for borrowers with multiple income streams that show up as deposits but not on tax returns.
Yes. Bank statement loans work for investment properties if your income covers the new payment. DSCR loans typically close faster for rentals since they skip personal income review.
Rates vary by borrower profile and market conditions. Both typically price 1-2 points above conventional rates. Your credit score and down payment affect pricing more than loan type.
No. Bank statement loans replace tax returns with 12-24 months of statements. DSCR loans skip personal financials entirely and qualify on property income alone.
Bank statement loans typically require 620 minimum. DSCR loans usually need 640. Higher scores unlock better rates and lower down payment options on both programs.
You can't combine them on one property. But you can use bank statements on your primary home and DSCR loans on your rental portfolio simultaneously.