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in Merced, CA
Both bank statement and DSCR loans bypass W-2 income verification, but they serve different borrowers in Merced. Bank statement loans work for self-employed buyers using personal income. DSCR loans qualify you based solely on rental cash flow.
Most Merced investors choose between these two when traditional financing won't approve them. The right choice depends on whether you're buying a primary residence or pure investment property.
Bank statement loans pull 12-24 months of business or personal bank deposits to calculate income. Lenders average your monthly deposits and apply an expense ratio, typically 25-50%. You need consistent cash flow and clean account activity.
This loan works for Merced contractors, realtors, restaurant owners, or anyone whose tax returns show less than actual earnings. Rates run 1-2% above conventional. Credit minimums start at 620, though 680+ gets better pricing.
DSCR loans ignore your personal income completely. Lenders divide monthly rent by the mortgage payment to calculate debt service coverage ratio. You need 1.0 or higher to qualify, though 1.25+ unlocks better rates.
This program only works for investment properties in Merced. You can't use it on a primary residence. No tax returns, no pay stubs, no employment verification. Credit minimums start at 660. Rates vary by borrower profile and market conditions.
Bank statement loans qualify you as a borrower. DSCR loans qualify the property. If you're self-employed buying a home to live in, bank statement is your only option. If you're buying a Merced rental, DSCR might approve you faster with less paperwork.
Bank statement loans require consistent deposit history and strong cash flow documentation. DSCR loans need an appraisal showing market rents that cover your debt. One examines your business health. The other examines the property's cash flow potential.
Choose bank statement if you're self-employed and buying a primary residence in Merced. It's also smart for investors who want flexibility across multiple property types. Choose DSCR if you're buying a rental and want the simplest approval process.
DSCR makes sense when rental income clearly covers the payment but your personal tax returns look weak. Bank statement works when you have strong deposits but write off too much income. We see Merced landlords use DSCR for scale because it doesn't tap their debt-to-income ratio.
Yes, bank statement loans work for investment properties. However, DSCR is usually faster and simpler when you're buying a rental.
Rates depend on credit score, down payment, and property type. DSCR often prices better for strong rental properties with high coverage ratios.
DSCR never requires tax returns. Bank statement loans sometimes ask for one year to verify self-employment, but don't use them for income calculation.
Bank statement typically starts at 10% down for primary homes, 15-20% for rentals. DSCR usually requires 20-25% down on investment properties.
Yes, both work for refinances. DSCR is common for cash-out refinances on Merced rentals when you need capital without income verification.