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in West Covina, CA
Both bank statement loans and DSCR loans skip W-2 verification, but they solve different problems. One qualifies you based on your business deposits. The other qualifies based on what the property earns.
West Covina investors and self-employed buyers often need both options in their toolkit. Your income structure and whether you're buying a primary home or rental property determines which loan makes sense.
Bank statement loans verify income through 12 to 24 months of business or personal bank deposits. Lenders calculate your qualifying income by averaging monthly deposits, then applying an expense ratio typically between 25% and 50%.
This option works for self-employed borrowers buying primary residences, second homes, or investment properties. You need consistent deposits and enough cushion after the expense ratio to support your debt-to-income calculation.
Credit requirements start around 620, though stronger profiles get better rates. Most lenders allow up to 90% loan-to-value on primary homes and 80-85% on investment properties.
DSCR loans qualify you based solely on rental income from the subject property. Lenders divide the monthly rent by the monthly debt service to get a ratio. Most require a DSCR of 1.0 or higher, meaning rent covers the mortgage payment.
Your personal income doesn't factor into approval. No tax returns, no pay stubs, no employment verification. The property either cash flows enough to qualify or it doesn't.
These loans only work for investment properties, not primary residences. Minimum credit scores typically run 620-640, with loan-to-value ratios up to 80%. Many lenders allow no-ratio DSCR loans below 1.0 with larger down payments.
Bank statement loans require your income documentation through deposits. DSCR loans ignore your income entirely and only care what the rental property generates. If you're buying a primary home in West Covina, bank statement is your only option between these two.
Rate pricing differs because risk profiles differ. Bank statement loans typically price 1-2% above conventional rates. DSCR loans often run slightly higher, especially on lower DSCR ratios or higher LTVs.
Underwriting speed favors DSCR loans since there's less documentation to review. Bank statement loans require analysis of every deposit and expense pattern. DSCR approval comes down to an appraisal and a rent schedule.
Choose bank statement loans if you're self-employed and buying a primary residence, second home, or investment property in West Covina. Your business shows healthy deposits but your tax returns understate income due to write-offs.
Choose DSCR loans if you're buying a West Covina rental and want approval based purely on property performance. You don't want to provide tax returns, or your personal income is complicated enough that documenting it creates more problems than it solves.
Some investors use both loan types across different properties. A triplex with strong rents might work perfectly for DSCR. A single-family rental with marginal cash flow might need your bank statements to push approval through.
Yes, bank statement loans work for investment properties. You'll need stronger reserves and accept lower LTV than on a primary residence, but the loan structure handles rentals.
No, DSCR loans don't require personal tax returns or income documentation. Approval depends entirely on the property's rental income versus the mortgage payment.
Bank statement loans typically price 1-2% above conventional rates. DSCR pricing runs similar or slightly higher depending on your DSCR ratio and down payment.
Yes, most DSCR lenders use market rent from the appraisal if the property isn't currently leased. The appraiser provides a rent schedule based on comparable properties.
Both loan types start around 620 minimum credit score. Stronger credit above 680 improves your rate and expands your lender options significantly.
Enough to cover your debt-to-income ratio after the expense factor. Most lenders apply 25-50% expenses against gross deposits, then calculate DTI from the net.