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in Pasadena, CA
Pasadena's real estate market attracts both self-employed professionals and property investors. Each group faces income verification challenges that traditional loans can't solve.
Bank statement loans serve business owners buying personal residences. DSCR loans serve investors acquiring rental properties. Both skip W-2s and tax returns, but they verify ability to pay in completely different ways.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate your income. Lenders apply a percentage to your average monthly deposits, typically 50-75% depending on whether you use personal or business accounts.
This loan works for self-employed borrowers buying a home to live in. You need decent credit (usually 620+), reasonable debt-to-income after the calculation, and enough down payment (often 10-20%).
Rates run higher than conventional loans because of the non-QM structure. But if your tax returns show low income due to write-offs while your bank account shows strong cash flow, this loan lets you qualify for what you can actually afford.
DSCR loans ignore your personal income entirely. Instead, they qualify you based on the rental property's income divided by its expenses. A DSCR of 1.0 means the rent covers the mortgage payment exactly.
Most lenders want to see 1.0 or higher, though some accept 0.75 if you put more money down. You don't provide tax returns, pay stubs, or employment verification. The property's rental income does all the work.
This loan exists for investors building rental portfolios. You can close in an LLC, scale faster without hitting personal DTI limits, and finance properties based purely on their cash flow potential.
Bank statement loans verify your ability to pay from personal cash flow. DSCR loans verify the property's ability to pay from rental income. That's the fundamental split.
Bank statement loans limit you to primary residences or second homes in most cases. DSCR loans only work for investment properties. You can't use a DSCR loan to buy a house you plan to live in.
Down payment requirements differ too. Bank statement loans often start at 10-15% down. DSCR loans typically require 20-25% minimum, especially for properties with lower coverage ratios.
Choose bank statement loans if you're self-employed and buying a home to live in around Pasadena. This includes business owners, contractors, commission-based professionals, or anyone with strong deposits but low reported income due to tax write-offs.
Choose DSCR loans if you're buying rental property and don't want your personal income scrutinized. This works especially well for investors with multiple properties, high earners who've maxed out conventional DTI limits, or anyone acquiring a property specifically for cash flow.
Some borrowers eventually use both. You might buy your Pasadena residence with a bank statement loan, then expand into rental properties with DSCR financing. The loans serve different purposes in your overall real estate strategy.
Most bank statement programs focus on primary residences, though some lenders allow second homes. For pure investment property, DSCR loans offer better terms and simpler qualification.
Rates vary by borrower profile and market conditions, but both carry non-QM pricing. DSCR loans may edge slightly lower for strong properties with high DSCR ratios.
Neither requires tax returns for income qualification. That's the whole point. However, some lenders request them to verify you file taxes, not to calculate income.
Yes. You can have a bank statement loan on your primary residence and multiple DSCR loans on investment properties. Each loan evaluates qualification differently.
DSCR is simpler if the property cash flows well. Bank statement loans require more underwriting of your deposits and spending patterns.