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in Etna, CA
Etna's rural rental market creates unique opportunities for self-employed buyers and investors. Both bank statement and DSCR loans bypass W-2 income verification, but they serve different purposes.
Bank statement loans work for owner-occupied properties and second homes. DSCR loans fund investment properties exclusively, qualifying you based on rental income instead of personal cash flow.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate your income. Lenders apply a percentage to your average deposits—typically 50% for personal accounts, 75% for business accounts after deducting expenses.
You can buy a primary home, second home, or investment property with this program. Credit scores start at 620, and down payments range from 10% to 20% depending on property type and credit profile.
This works well for contractors, farmers, and small business owners in Etna who show strong cash flow but lack traditional pay stubs. Rates typically run 1% to 2% above conventional mortgages.
DSCR loans ignore your personal income entirely. Lenders look at the property's rental income compared to the total housing payment—that ratio is the debt service coverage ratio.
You need a DSCR of at least 1.0, meaning rent covers the mortgage payment. Many lenders prefer 1.2 or higher. A $1,500 rent with a $1,250 payment gives you a DSCR of 1.2.
This program requires 20% to 25% down and credit scores above 640. You can close in an LLC, making it ideal for building a rental portfolio in Siskiyou County without maxing out your debt-to-income ratio.
The biggest split is property use. Bank statement loans let you live in the home. DSCR loans require the property to be rented—you cannot occupy it as your primary residence.
Income verification differs completely. Bank statement loans analyze your cash flow and business deposits. DSCR loans only care about the rent versus the mortgage payment, ignoring your personal finances.
DSCR loans typically require larger down payments—20% to 25% compared to 10% to 15% for bank statement loans on primary homes. But DSCR loans let you finance multiple properties without debt stacking on your personal ratios.
Choose bank statement loans if you're self-employed and buying a home to live in. This option works for Etna residents with strong business income who want to avoid the tax return requirement on conventional loans.
Pick DSCR if you're acquiring rental property and want to keep personal finances separate. This matters in rural markets where you might buy multiple parcels or cabins without hitting debt-to-income limits.
For mixed strategies—buying a primary home now and rentals later—start with a bank statement loan for your residence. Then use DSCR financing for investment acquisitions without affecting your personal borrowing capacity.
Yes, but DSCR loans usually make more sense. Bank statement loans require documenting your personal income even for rentals, while DSCR loans qualify on rent alone.
Lenders use current lease agreements or appraisal rent estimates. For vacant properties, the appraiser provides a market rent opinion used in DSCR calculations.
Most lenders want 12 to 24 months of bank statements showing consistent deposits. You don't need two years in the same business, just stable cash flow documentation.
Yes, but lenders calculate differently. Personal accounts use 50% of deposits, business accounts use 75% after expense deductions based on your industry.
Rates are similar—both run 1% to 2% above conventional. DSCR loans may price slightly better with strong rent coverage above 1.25 DSCR. Rates vary by borrower profile and market conditions.