Question 1

Can I use both loan types for the same property?

Accepted Answer

No, you choose one qualification method per property. However, you can use Bank Statement loans for your residence and DSCR loans for separate investment properties.

Question 2

Which loan type typically has better rates?

Accepted Answer

Rates vary by borrower profile and market conditions. Both are non-QM products with similar pricing, though individual circumstances affect final rates significantly.

Question 3

Do I need rental experience for DSCR loans?

Accepted Answer

Most lenders don't require prior landlord experience. The property's rental income potential drives approval rather than your management history.

Question 4

How much cash flow do I need for Bank Statement loans?

Accepted Answer

Lenders typically calculate 50-100% of deposits as qualifying income after expenses. The exact percentage depends on business type and deposit consistency.

Question 5

What DSCR ratio do I need for approval?

Accepted Answer

Most lenders require a minimum ratio of 1.0, meaning rent covers the payment. Higher ratios above 1.25 often qualify for better terms.

Bank Statement vs DSCR Loans: Which Works Best for East Palo Alto Investors?