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in Willits, CA
Both Bank Statement and DSCR loans skip W-2 verification, but they solve different problems. Bank Statement loans work for self-employed borrowers buying primary homes or second properties.
DSCR loans ignore your personal income entirely and underwrite the rental property itself. In Willits and Mendocino County, I see borrowers confuse these two non-QM options constantly.
Bank Statement loans use 12 to 24 months of business or personal bank deposits to calculate your income. Lenders average your deposits and apply an expense ratio—typically 25% to 50%—to determine qualifying income.
These loans work for self-employed borrowers who write off most earnings and can't show enough income on tax returns. You'll need credit scores around 620-640 and 10-20% down depending on property type.
I use Bank Statement loans for Willits buyers who run seasonal businesses, contractors, and cannabis industry workers who operate legally but can't get conventional approval.
DSCR loans qualify you based solely on the rental income the property generates. Lenders calculate a Debt Service Coverage Ratio by dividing monthly rent by the mortgage payment (PITI).
A DSCR of 1.0 means rent exactly covers the payment. Most lenders want 1.0 to 1.25 depending on your down payment and credit score.
Your personal income never enters the equation. You could earn $30,000 or $300,000 annually—the lender only cares what the property cash flows. This makes DSCR loans perfect for investors with strong rental properties but complex tax situations.
Bank Statement loans still underwrite you as the borrower—your deposits, credit, and debt-to-income ratio all matter. DSCR loans underwrite the property and ignore your personal finances almost completely.
Property type is the biggest divider. Bank Statement loans work for primary residences, second homes, and investment properties. DSCR loans only finance investment properties with rental income.
Down payment and rates differ too. Bank Statement loans can go as low as 10% down on owner-occupied homes. DSCR loans typically require 20-25% down since they carry higher risk for lenders. Rates vary by borrower profile and market conditions.
Choose Bank Statement loans if you're self-employed and buying a home to live in. Also use them if you're buying a rental but want the flexibility to refinance into conventional financing later once your tax returns improve.
Choose DSCR loans if you're buying pure investment property and the rent covers the payment. These work especially well for investors who don't want to provide personal income documentation or already carry high personal debt ratios.
In Willits, I see Bank Statement loans for local business owners buying homes near town. DSCR loans work for Bay Area investors buying rental properties up here where rents are strong relative to purchase prices.
Yes. Bank Statement loans work for investment properties, but you'll need higher credit scores and larger down payments than for primary homes.
Most lenders accept a 1.0 DSCR with 25% down and strong credit. Lower down payments typically require 1.15 or higher.
Rates vary by borrower profile and market conditions. DSCR loans often price slightly better than Bank Statement loans due to simpler underwriting.
DSCR loans often allow LLC ownership. Bank Statement loans typically require individual borrowers, though some lenders offer exceptions.
No. You'll choose one program per property based on occupancy type and how you want to prove income.