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in Milpitas, CA
Milpitas investors and self-employed professionals often face challenges with traditional mortgage qualifying. Both Bank Statement and DSCR loans offer alternative paths to financing without requiring W-2 income verification.
These non-QM loan options serve different purposes. Bank Statement loans help self-employed borrowers purchase primary residences or investment properties using business cash flow. DSCR loans focus exclusively on rental property income potential.
Understanding which option aligns with your goals makes the difference between getting approved or facing rejection. Each program has distinct qualification methods and ideal use cases.
Bank Statement loans analyze 12 to 24 months of personal or business bank statements to calculate qualifying income. Lenders review deposits and apply a percentage to determine your borrowing power, typically 50% to 75% of average monthly deposits.
This program works for self-employed borrowers who write off significant business expenses. Your tax returns might show low income, but bank statements reveal actual cash flow through your accounts.
You can use Bank Statement loans for primary residences, second homes, or investment properties in Milpitas. Down payments typically start at 10% to 20%, though requirements vary based on credit scores and property type.
DSCR loans qualify borrowers based entirely on rental property income, not personal earnings. Lenders divide the property's monthly rent by the monthly mortgage payment to calculate the Debt Service Coverage Ratio.
A DSCR of 1.0 means rental income equals the mortgage payment. Most lenders require ratios between 1.0 and 1.25, though some accept lower ratios with compensating factors like larger down payments.
This program exclusively serves real estate investors purchasing or refinancing rental properties. Your personal income, employment status, and tax returns don't factor into approval decisions. The property must cash flow sufficiently to cover the loan payment.
The fundamental difference lies in what income counts. Bank Statement loans examine your business cash flow through bank deposits. DSCR loans ignore your income entirely, focusing only on rental property performance.
Property type restrictions separate these programs significantly. Bank Statement loans work for any property you want to buy or refinance. DSCR loans only apply to investment properties generating rental income.
Documentation requirements vary considerably. Bank Statement loans need 12-24 months of statements plus standard credit and asset verification. DSCR loans require rent rolls, lease agreements, and property appraisals showing market rent potential.
Rates vary by borrower profile and market conditions. Both programs typically carry slightly higher rates than conventional loans due to their flexible qualifying standards.
Choose Bank Statement loans if you're self-employed and buying a home to live in. This program also works for investors who want to use their business income to qualify for rental properties in Milpitas.
Select DSCR loans when purchasing investment properties and you prefer to keep personal finances separate. This option shines for investors with strong rental income but complex tax returns or limited documented income.
Consider your goals carefully. Buying your primary residence? Bank Statement is likely your path. Building a rental portfolio without income verification? DSCR makes more sense. Some investors use both programs for different properties.
Yes, many investors use Bank Statement loans for some properties and DSCR for others. The choice depends on whether you want to qualify using personal business income or rental property cash flow.
Bank Statement loans typically require 10-20% down depending on property type and credit. DSCR loans usually need 20-25% down for investment properties. Requirements vary by lender and borrower profile.
Both programs can finance small multifamily properties. Bank Statement works if you'll live in one unit. DSCR applies when treating the entire property as an investment based on total rental income.
Processing timelines are similar, typically 30-45 days. Bank Statement loans need time to analyze deposits. DSCR loans require rent comparables and property income verification.
Yes, both programs allow refinancing. Bank Statement refinances use your business income. DSCR refinances qualify based on current or projected rental income from the property.