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in Escondido, CA
Escondido's mix of primary residences and investment properties creates demand for both bank statement and DSCR loans. Both bypass W-2 income verification, but they serve completely different borrowers.
Bank statement loans work for self-employed buyers purchasing a home to live in. DSCR loans are for investors buying rental properties where the rent covers the mortgage.
Bank statement loans use 12 or 24 months of personal or business bank deposits to calculate income. Lenders apply a percentage to your average deposits—typically 50% for personal accounts, higher for business accounts.
You need decent credit, usually 620 minimum but 680+ gets better rates. Down payment starts at 10% but most lenders want 15-20% for owner-occupied homes in San Diego County.
This option works for contractors, real estate agents, freelancers, and business owners who write off most of their income. You're living in the property, not renting it out.
DSCR loans ignore your personal income completely. Lenders only care if the property's rent covers the mortgage payment, taxes, insurance, and HOA fees.
The debt service coverage ratio compares monthly rent to monthly housing expense. A ratio above 1.0 means rent exceeds the payment—that's a strong deal that gets better pricing.
These loans require 15-25% down for investment properties. No income docs, no tax returns, no employment verification. The property itself qualifies.
The biggest split is occupancy. Bank statement loans are for homes you live in. DSCR loans are strictly for rental properties—you cannot occupy the property.
Documentation differs completely. Bank statement loans require deposits proving your earning power. DSCR loans need a lease agreement or rental appraisal showing market rent.
Rates on DSCR loans run 0.5-1.0% higher than bank statement loans because investment properties carry more risk. Both beat hard money, but neither touches conventional rates.
Choose bank statement loans if you're self-employed and buying a home to live in around Escondido. You need consistent deposits and decent credit, but you don't need W-2s or tax returns that show enough income.
Pick DSCR loans if you're buying a rental property and the rent covers the payment. This works even if your personal income wouldn't qualify conventionally—your W-2 job, business losses, or tax strategy don't matter.
Some borrowers use both. Buy your primary residence with a bank statement loan, then finance rental properties with DSCR loans. The programs don't conflict.
No. Bank statement loans require owner occupancy. For rentals, you need a DSCR loan or another investor product.
Most lenders accept ratios as low as 0.75, but you'll pay higher rates. A ratio above 1.0 unlocks better pricing and easier approval.
No personal income docs needed. Lenders only verify the property's rent through a lease or appraisal with rent schedule.
Bank statement loans typically beat DSCR rates by 0.5-1.0%. Investment properties always carry higher rates than owner-occupied homes.
You can't convert occupancy types mid-loan. If you move out of a primary residence, you could later refinance to DSCR as a rental.