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in San Diego, CA
San Diego's self-employed borrowers and real estate investors have two strong non-QM paths when traditional W-2 income documentation won't work. Bank statement loans verify income through deposits, while DSCR loans ignore personal income entirely and focus on rental cash flow.
Both skip tax returns and DTI calculations that trip up conventional loans. The choice depends on whether you're buying a primary residence or investment property.
Bank statement loans pull income from 12 to 24 months of business or personal bank statements. Underwriters calculate average monthly deposits, then apply an expense factor—typically 50% for sole proprietors or 25% for corporations.
This works for self-employed borrowers buying primary homes, second homes, or investment properties. You need decent credit, usually 620 minimum, and 10-20% down depending on the lender and property type.
Rates run 1-2% above conventional because you're compensating lenders for documentation risk. But if your tax returns show heavy write-offs that tank your stated income, bank statements capture the real cash flow through your accounts.
DSCR loans qualify you based on one number: rental income divided by total monthly housing payment. A DSCR of 1.0 means the rent exactly covers PITI. Most lenders want 1.0 or higher, though some go down to 0.75 with larger down payments.
Your personal income, employment, and tax returns don't matter. The property either cash flows or it doesn't. This only works for investment properties—no primary residences or second homes.
You typically need 20-25% down and credit above 640. Rates are comparable to bank statement loans. The trade-off is speed—DSCR underwriting moves faster because lenders review fewer documents.
The clearest split is property use. Bank statement loans work for any occupancy type—primary, second home, or rental. DSCR loans only finance investment properties where you collect rent.
Income verification runs opposite directions. Bank statement loans still verify your ability to repay through personal deposits. DSCR loans don't care about your income—they care whether the property generates enough rent to cover the note.
Documentation volume differs significantly. Bank statement loans require 12-24 months of statements, business licenses, CPAs letters in some cases. DSCR loans need a lease agreement or rent schedule and an appraisal. That's mostly it.
Choose bank statement loans if you're self-employed and buying a home to live in. DSCR won't qualify owner-occupied properties. Bank statements also work if you're buying a rental but want the option to use personal income as backup.
Choose DSCR if you're a real estate investor buying rentals and want the cleanest underwriting process. Your personal financials stay out of it. DSCR also wins if your personal income is messy but you're buying cash-flowing properties.
San Diego's rental market makes DSCR attractive for investors targeting single-family or small multifamily deals. Bank statement loans fit self-employed professionals buying in coastal neighborhoods where they'll live.
Yes. Bank statement loans work for rentals, primary homes, and second homes. DSCR is investment-only.
No. DSCR loans skip personal tax returns entirely and qualify based on rental income from the property.
Rates are similar, typically 1-2% above conventional. Final pricing depends on credit, down payment, and property type.
Bank statement loans start around 620. DSCR loans typically require 640 minimum, though some lenders go lower.
Bank statement loans need 10-20% down. DSCR loans usually require 20-25% for investment properties.
DSCR loans close faster due to less documentation. Bank statement loans need 12-24 months of statements reviewed.