Loading
in Palmdale, CA
Palmdale borrowers who can't document W-2 income typically land on one of two paths: bank statement loans or DSCR loans. Both skip traditional pay stubs, but they serve completely different borrower types.
Bank statement loans look at your personal cash flow through deposits. DSCR loans ignore your personal income entirely and qualify you based on what the rental property earns.
Most self-employed borrowers pick the wrong one by default. The difference comes down to whether you're buying a primary residence or an investment property.
Bank statement loans qualify you using 12 to 24 months of business or personal bank deposits. Underwriters calculate income by averaging monthly deposits, sometimes applying expense ratios between 25% and 50%.
These work for self-employed Palmdale residents buying primary homes, second homes, or investment properties. You need consistent deposits and reasonable debt-to-income ratios after expenses get factored in.
Credit minimums typically start around 620, though 660+ unlocks better pricing. Expect down payments from 10% to 20% depending on property type and occupancy.
DSCR loans qualify based solely on rental income divided by the property's debt obligations. If the property generates $3,000 monthly and the mortgage payment is $2,400, your DSCR is 1.25.
Most lenders want a minimum DSCR of 1.0, though better ratios unlock lower rates. Your personal income, tax returns, and employment history don't matter at all during underwriting.
These only work for investment properties, never primary residences. Palmdale investors use them to scale rental portfolios without hitting DTI limits that would cap conventional financing.
The property purpose splits these loans immediately. Bank statement works for any occupancy type including where you'll live. DSCR requires you to rent the property out.
Income verification goes opposite directions. Bank statement loans dig into your personal finances through deposits. DSCR loans never ask about your business or personal earnings.
Pricing usually favors bank statement loans when credit and down payment are strong. DSCR loans cost more upfront but let investors acquire multiple properties without income documentation drowning the file.
Debt-to-income matters for bank statement loans since underwriters calculate your personal DTI. DSCR loans skip DTI entirely, making them ideal for borrowers who already carry significant debt or own multiple rentals.
Choose bank statement loans if you're self-employed and buying a home to live in. Also pick this route if you're an investor with strong personal cash flow who wants better pricing than DSCR typically offers.
Choose DSCR loans when you're buying strictly for rental income and the property cash flows well. This works especially well for Palmdale investors scaling portfolios or those whose personal tax returns show low income by design.
Many brokers see investors overthink this decision. If the property is a rental and the numbers work at 1.0+ DSCR, that's usually the simpler path than documenting business bank statements.
Yes, bank statement loans work for investment properties. DSCR loans just make more sense for investors since they skip personal income verification entirely.
Bank statement loans typically price better when credit and down payment are strong. DSCR rates run higher but offer easier qualification for pure investors.
Bank statement loans skip tax returns but use bank deposits. DSCR loans may request returns to verify other income but don't use them for qualifying.
Both typically start around 620, with better pricing at 660+. Rates vary by borrower profile and market conditions.
No, you pick one qualifying method. If it's a rental, DSCR is simpler since it ignores your personal finances completely.