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in Folsom, CA
Folsom investors and self-employed professionals often need flexible financing beyond traditional mortgages. Bank Statement Loans and DSCR Loans both offer non-QM solutions, but they serve different purposes and qualify borrowers using distinct methods.
Bank Statement Loans focus on your business cash flow through 12 to 24 months of deposits. DSCR Loans evaluate the rental property's income potential instead of your personal earnings. Understanding which approach aligns with your financial profile determines your best path forward.
Bank Statement Loans let self-employed borrowers in Folsom qualify using 12 to 24 months of business or personal bank statements. Lenders calculate your income from average monthly deposits, typically applying a percentage to account for business expenses.
This option works well for business owners, freelancers, and independent contractors who show strong cash flow but write off significant expenses on tax returns. You can purchase a primary residence, second home, or investment property using this method.
Documentation requirements are simpler than traditional loans but more comprehensive than DSCR options. You'll provide bank statements, proof of business ownership, and standard credit and asset verification.
DSCR Loans qualify Sacramento County investors based solely on a rental property's income potential. The Debt Service Coverage Ratio compares projected monthly rent to the total monthly housing payment, including principal, interest, taxes, insurance, and HOA fees.
These loans require minimal personal income documentation, making them attractive for investors with complex tax situations or multiple properties. The property must generate enough rental income to cover its expenses, typically with a DSCR of 1.0 or higher.
DSCR Loans are investment-property-only financing. You cannot use them for primary residences or second homes. Folsom investors building rental portfolios often prefer this streamlined qualification process.
The fundamental difference lies in what gets evaluated. Bank Statement Loans assess your business income and personal financial strength. DSCR Loans focus exclusively on whether the rental property generates sufficient income to support itself.
Bank Statement Loans require proof of self-employment and consistent deposits over 12 to 24 months. DSCR Loans need a rental analysis or existing lease agreement but skip personal income verification entirely. This makes DSCR faster for investors who qualify.
Property type restrictions differ significantly. Bank Statement Loans fund primary residences, second homes, and investment properties throughout Folsom. DSCR Loans exclusively finance rental investments, making them unsuitable if you plan to occupy the property.
Choose Bank Statement Loans if you're self-employed and buying a home to live in, or if you want flexibility across property types. This option suits Folsom business owners with strong cash flow who need to prove personal income capacity for any property purpose.
Select DSCR Loans if you're purchasing a rental property and prefer minimal personal documentation. Investors with multiple properties, complex tax returns, or those seeking the fastest approval process benefit most from the property-income-only approach.
Your situation may allow both options. A Folsom investor buying a rental with strong projected rents could use DSCR for simplicity. That same investor purchasing a primary residence would need Bank Statement Loans since DSCR doesn't cover owner-occupied homes.
Yes, Bank Statement Loans work for investment properties, primary residences, and second homes. You'll qualify based on your business income shown through bank deposits rather than tax returns.
No, DSCR Loans skip personal income documentation. Lenders qualify you based on the rental property's income potential, not your personal earnings or employment history.
Rates vary by borrower profile and market conditions for both options. DSCR Loans may price slightly higher due to minimal documentation, but strong property performance can offset this difference.
DSCR Loans often close faster since they require less personal documentation. Bank Statement Loans need 12-24 months of statements reviewed, which can extend processing time slightly.
You can use different loan types for different properties. Many Folsom investors use Bank Statement Loans for their residence and DSCR Loans for rental properties simultaneously.