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in Mill Valley, CA
Mill Valley's real estate attracts both self-employed professionals and real estate investors. Both groups struggle with traditional mortgage requirements that don't match how they earn money.
Bank statement loans work for self-employed borrowers who need a primary residence or investment property. DSCR loans work exclusively for investors buying rental properties.
The fundamental difference: bank statement loans qualify you based on your deposits. DSCR loans qualify the property based on its rental income.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate income. Underwriters apply a percentage factor to your average monthly deposits, typically 50% for businesses and 100% for personal accounts.
This loan type helps self-employed borrowers who write off most of their income on tax returns. Your 1040 might show $60K in income, but your deposits show $180K flowing through your accounts.
You can buy a primary residence, second home, or investment property. Credit score requirements start at 620, though Mill Valley's higher property values often require better credit for approval.
Expect rates 1.5% to 2.5% above conventional loans. Down payment requirements range from 10% to 20% depending on property type and credit profile.
DSCR loans ignore your personal income completely. Underwriters calculate the property's rental income divided by its monthly debt obligations, creating the debt service coverage ratio.
A ratio above 1.0 means the rent covers the mortgage. Most lenders require 1.0 to 1.25 DSCR depending on the deal. Some programs go as low as 0.75 DSCR if you have compensating factors.
These loans only work for investment properties. You can't use DSCR for a primary residence or second home under any circumstances.
Credit score minimums start at 620, though better rates kick in at 680. Down payments range from 20% to 25% for single-family rentals.
Income source separates these programs entirely. Bank statement loans verify your ability to pay through personal deposits. DSCR loans verify the property's ability to pay through rental income.
Property type restrictions differ significantly. Bank statement programs allow primary residences, which most self-employed Mill Valley buyers need. DSCR requires an investment property with rental income.
Documentation requirements flip the script. Bank statement loans need extensive personal financial records but no tax returns. DSCR loans need a lease agreement or rental appraisal but minimal personal documentation.
Down payment and rate structures run similar. Both charge non-QM premiums of 1.5% to 3% above conventional rates. Both require 15% to 25% down depending on the specific scenario.
Choose bank statement loans if you're self-employed and buying a primary residence in Mill Valley. This applies to business owners, consultants, freelancers, and anyone with significant write-offs.
Choose DSCR if you're buying a rental property and want to avoid documenting personal income. This works for investors buying additional properties without increasing personal debt ratios.
Many Mill Valley investors use both programs at different times. They might use bank statement for a primary residence, then switch to DSCR for subsequent rental acquisitions.
The wrong choice kills your deal before underwriting starts. We see borrowers apply for DSCR on primary residences or bank statement without sufficient deposits. Match the program to your actual situation first.
Yes, bank statement programs work for both primary residences and investment properties. DSCR loans only work for investment properties, never primary homes.
Rates run similar on both programs, typically 1.5-2.5% above conventional. Your credit score and down payment affect pricing more than the program choice.
Neither program requires tax returns for income verification. Bank statement uses deposits, DSCR uses rental income, making both ideal for borrowers with complex tax situations.
Some lenders approve DSCR ratios as low as 0.75, meaning rent covers 75% of the payment. This requires higher credit scores and larger down payments.
DSCR loans typically close faster because they require less borrower documentation. Bank statement loans need 12-24 months of statements plus extensive analysis.