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in South El Monte, CA
South El Monte borrowers often need non-QM loans when traditional W-2 income verification doesn't work. Self-employed business owners gravitate toward bank statement loans. Investors buying rental properties typically choose DSCR loans instead.
Both programs skip tax returns and ignore debt-to-income ratios. The core difference is what they're designed to finance. Bank statement loans fund primary residences for people with irregular income. DSCR loans fund investment properties using the rental income alone.
Bank statement loans use 12 to 24 months of business or personal bank deposits to calculate your income. Lenders apply a percentage factor to your average monthly deposits. Most programs accept 50% of deposits as qualifying income to account for business expenses.
This works for contractors, freelancers, and small business owners who write off significant expenses. You need a 620 minimum credit score. Down payments start at 10% but most deals require 15-20% down for competitive rates.
DSCR loans qualify you based on what the property generates in rent compared to its debt obligation. The property needs to produce enough rental income to cover the mortgage payment. A DSCR of 1.0 means rent equals the mortgage. Most lenders want 1.0 or higher.
Your personal income and employment don't matter at all. The property itself qualifies or doesn't. You need 20-25% down on single-family rentals. Credit score minimums run 620-640 depending on the lender and DSCR ratio.
Bank statement loans require stable business income flowing through your accounts. DSCR loans require a property with strong rental potential. One looks at your earning ability. The other looks at the property's cash flow performance.
Bank statement loans fund primary homes and second homes. DSCR loans only work for investment properties. You can't live in a DSCR-financed property. Rates vary by borrower profile and market conditions, but DSCR rates typically run 0.25-0.75% higher than bank statement rates.
Choose bank statement loans if you're self-employed and buying a home to live in. Your business deposits need to show consistent income over 12 months minimum. This program won't help investors who want to avoid personal income verification.
Choose DSCR if you're buying a rental property in South El Monte and don't want to document personal income. The rental market rate determines your approval, not your tax returns. This works even if you have multiple properties or complex income that's hard to document traditionally.
Some lenders allow it for 1-4 unit properties where you occupy one unit. Pure investment properties need DSCR loans instead.
Lenders use current lease agreements or market rent appraisals. They take 75% of the appraised rent to account for vacancy and expenses.
DSCR loans allow LLC or personal ownership. Bank statement loans typically require personal name ownership since you're occupying the property.
DSCR loans often close quicker because there's less income documentation. Bank statement loans need 12-24 months of statements reviewed and calculated.
Yes, both work for refinances. DSCR rate-and-term refinances often require just 6 months of seasoning on investment properties.