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in Nevada City, CA
Nevada City buyers juggling self-employment income or investment properties hit the same wall with traditional lenders. Both bank statement and DSCR loans solve approval problems, but they measure qualification completely differently.
Bank statement loans focus on your personal cash flow across all income sources. DSCR loans only care about one thing: whether the rental property pays for itself.
Bank statement loans use 12 or 24 months of business or personal bank deposits to calculate income. Lenders analyze consistent inflows, averaging monthly deposits to determine what you can afford.
This works for contractors, consultants, or business owners with steady deposits but complex tax returns. You need decent credit, typically 620 minimum, and 10-20% down depending on the property type and use.
DSCR loans qualify you based on the property's rental income divided by its monthly debt. A ratio above 1.0 means rent covers the mortgage, taxes, and insurance without touching your personal income.
Investors use these to grow portfolios without hitting debt-to-income limits. No tax returns, no pay stubs, no employment verification. Just an appraisal showing market rent and the property's ability to carry itself.
Bank statement loans require proving your personal income strength through deposits. DSCR loans ignore your income entirely and focus only on whether the rental property generates enough to cover its own expenses.
If you're buying a primary home or vacation property in Nevada City, only bank statement works. DSCR requires investment properties with rental income. Rates vary by borrower profile and market conditions, but DSCR often prices slightly higher due to investor risk.
Choose bank statement if you're self-employed and buying a home to live in, or if your investment property doesn't generate strong rental income yet. You need consistent deposits and provable cash flow across your accounts.
Choose DSCR if you're buying a rental property with solid market rent and want to avoid personal income scrutiny. This matters most for investors with multiple properties or those who write off significant business expenses that lower taxable income.
Yes, bank statement loans work for both primary homes and investment properties. However, DSCR often makes more sense for pure rentals since it ignores your personal income.
Most lenders want 1.0 to 1.25 DSCR minimum. That means monthly rent needs to equal or exceed the property's total debt by 0-25% depending on your credit and down payment.
DSCR typically prices 0.25-0.75% higher due to investor risk factors. Rates vary by borrower profile and market conditions, so we compare both across our lender network.
Bank statement loans skip tax returns but require 12-24 months of bank statements. DSCR loans skip both tax returns and bank statements entirely.
You don't switch loans, but you could refinance later. If you used bank statement to buy and convert to a rental, DSCR might work for a future refi.