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in Point Arena, CA
Point Arena's coastal real estate attracts both self-employed buyers and rental property investors. Traditional mortgage qualification won't work for either group, which is where non-QM loans come in.
Bank statement loans and DSCR loans both skip W-2 verification. But they serve completely different purposes and qualify you using entirely different methods.
Bank statement loans let self-employed borrowers qualify using 12 to 24 months of business or personal bank deposits. Lenders calculate your income by averaging monthly deposits, then applying expense ratios based on your business type.
This works for business owners, freelancers, and contractors buying a primary residence or vacation home in Point Arena. You need decent credit—typically 620 minimum—and at least 10% down, though 15-20% gets better rates.
The loan uses your actual cash flow instead of tax returns. That matters because most self-employed borrowers write off expenses that reduce taxable income but don't reflect real earning power.
DSCR loans qualify you based entirely on rental income from the property you're buying. Lenders calculate a debt service coverage ratio by dividing monthly rent by the monthly mortgage payment (including taxes and insurance).
You need a DSCR of at least 1.0, meaning rent covers the full payment. Most lenders want 1.25 or higher for the best rates. This loan ignores your personal income, W-2s, tax returns, and employment entirely.
Point Arena rental properties with strong seasonal demand or long-term tenant appeal work well here. You typically need 20-25% down and a 660+ credit score, though some lenders go lower.
The fundamental split: bank statement loans are for people who want to live in the property. DSCR loans are for rental investors who won't occupy it. You can't use a DSCR loan on a primary residence or second home.
Qualification methods couldn't be more different. Bank statement loans analyze your business cash flow and personal finances. DSCR loans look only at the rental property's income potential and appraisal.
Down payments differ slightly—bank statement loans start at 10% while DSCR loans typically require 20-25%. Both charge higher rates than conventional loans, but DSCR rates tend to run slightly higher due to investor risk factors.
Choose a bank statement loan if you're self-employed and buying a home to live in or use as a vacation property in Point Arena. It's the only non-QM option that allows owner occupancy when you can't document income through tax returns.
Choose a DSCR loan if you're buying rental property and the rent covers your mortgage payment. This works especially well for investors with complex tax situations or multiple properties who don't want personal income scrutinized.
Some borrowers qualify for both but are buying investment property. In that case, DSCR is usually simpler—fewer documents, faster approval, and no deep dive into your business finances. Rates vary by borrower profile and market conditions.
Yes, DSCR loans don't care about your employment status. They only look at whether the rental income covers the mortgage payment.
DSCR loans typically close faster because they require less documentation. No bank statements, tax returns, or income verification needed.
Bank statement loans work if you'll use it personally. DSCR loans work if it's purely investment and generates rental income year-round.
Some lenders approve ratios as low as 0.75, but you'll need a larger down payment and accept higher rates. Below that, you won't qualify.
Yes, after you've met the occupancy requirement (typically one year). But you'd start with a bank statement loan, not DSCR.