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in San Carlos, CA
San Carlos investors and self-employed borrowers often face challenges qualifying for traditional mortgages. Bank Statement and DSCR loans offer alternative paths to financing without requiring W-2 income verification.
Both loan types fall under the Non-QM category, designed for borrowers whose financial situations don't fit conventional lending boxes. Understanding the differences helps you choose the right tool for your San Carlos real estate goals.
Bank Statement loans use 12 to 24 months of personal or business bank statements to verify your income instead of tax returns. This approach works well for self-employed professionals, business owners, and freelancers in San Carlos.
Lenders analyze your deposits to calculate qualifying income, typically using a percentage of your average monthly deposits. This method often reveals higher income than tax returns show, especially for borrowers who maximize business deductions.
These loans work for primary residences, second homes, and investment properties. You'll need decent credit and a down payment, but the flexible income documentation makes them accessible for entrepreneurs who show strong cash flow.
DSCR loans qualify you based solely on the rental property's income potential, not your personal income. The property must generate enough rent to cover the mortgage payment, with lenders typically requiring a ratio above 1.0.
These loans are strictly for investment properties in San Carlos and surrounding areas. Your personal income, employment status, and tax returns don't factor into approval—only the property's rental performance matters.
DSCR loans appeal to investors building portfolios without hitting debt-to-income ratio walls. You can finance multiple properties based on each one's cash flow rather than stretching your personal income across all mortgages.
The fundamental difference lies in what qualifies you. Bank Statement loans still examine your personal income and debt-to-income ratio, just through bank deposits instead of tax forms. DSCR loans ignore your personal finances entirely, focusing on rental income.
Property type restrictions differ significantly. Bank Statement loans work for homes you'll live in or rent out. DSCR loans only finance investment properties—you cannot use them for a primary residence in San Carlos.
Both require competitive rates compared to conventional loans, though pricing varies by borrower profile and market conditions. DSCR loans often allow higher leverage on rental properties, while Bank Statement loans may offer more flexibility in property use.
Choose Bank Statement loans if you're self-employed and buying a home to live in, need to show income your tax returns understate, or want flexibility between personal and investment properties. They work when you have strong cash flow but complex tax situations.
DSCR loans make sense when you're focused purely on building a San Carlos rental portfolio, already own your primary residence, or want to avoid personal income scrutiny entirely. They excel for investors who want to scale without personal debt-to-income limitations.
Some San Carlos borrowers use both—Bank Statement loans for personal residences and DSCR loans for rental properties. Your specific situation, property plans, and financial structure determine the best fit. Rates vary by borrower profile and market conditions for both options.
Yes, Bank Statement loans work for investment properties, primary residences, and second homes. You'll qualify based on your personal bank deposits rather than tax returns.
No, DSCR loans qualify you solely on the rental property's income. Your employment, personal income, and tax returns don't factor into approval at all.
Rates vary by borrower profile and market conditions for both programs. Neither consistently offers better pricing—your specific situation and the property determine your rate.
No, DSCR loans are exclusively for investment properties. For a primary residence, you'd need a Bank Statement loan or conventional financing instead.
Most Bank Statement loan programs require 12 to 24 months of personal or business bank statements to calculate your qualifying income.