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in Novato, CA
Novato's housing market attracts both self-employed professionals and real estate investors. Both groups often struggle with traditional mortgage requirements.
Bank statement and DSCR loans solve different problems. One qualifies you on deposits. The other qualifies the property on rent.
Bank statement loans use 12 or 24 months of business or personal bank deposits to calculate income. Lenders typically apply a 50% expense ratio to your average deposits.
You need decent personal credit—usually 620 minimum, though 680+ gets better rates. This loan works for owner-occupied properties or second homes in Novato.
Most lenders cap at 90% LTV for purchases, 80% for refinances. You'll pay higher rates than conventional—typically 1-2% above agency pricing.
DSCR loans ignore your personal income entirely. Lenders calculate the property's monthly rent divided by its monthly debt (PITI). A ratio above 1.0 means the property covers itself.
You can qualify with ratios as low as 0.75 on some programs—meaning rent covers 75% of the payment. No tax returns, no pay stubs, no employment verification.
These loans only work for investment properties. Marin County rental properties command strong rents, which helps your ratio. Most lenders allow up to 80% LTV and require 660+ credit.
The biggest split: bank statement loans use your income, DSCR loans use property income. If you're buying a Novato home to live in, bank statement is your only option.
Bank statement loans require proving consistent deposits. DSCR loans require proving the property generates enough rent. One looks backward at your cash flow. The other looks forward at rental income.
Credit matters more on DSCR deals. Most DSCR lenders won't go below 660. Bank statement lenders often approve 620 scores if deposits are strong.
Choose bank statement loans if you're self-employed and buying a Novato home to live in. Also pick bank statements if you're an investor but the property's rent is weak relative to its price.
Choose DSCR if you're buying a rental property with solid rent relative to the payment. DSCR makes more sense when your personal tax returns show low income but the property cash flows well.
Marin County's strong rental demand helps DSCR ratios. But Novato's home prices can strain those ratios. Run the numbers before choosing your path.
Yes, but DSCR usually works better for pure investment deals. Bank statement loans shine when you need owner-occupied financing or the rental income doesn't meet DSCR thresholds.
Most lenders want 1.0 or higher—rent fully covers the payment. Some programs go as low as 0.75, meaning you cover the 25% shortfall from other income.
Yes. Bank statement loans typically need 6-12 months of reserves. DSCR loans often require 6 months per financed property you own.
Bank statement loans usually price slightly better when credit and equity are strong. DSCR rates run higher but avoid personal income scrutiny entirely.
Absolutely. Use bank statement for your Novato primary residence and DSCR for your rental properties. Many investors layer both strategies across multiple deals.