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in Cotati, CA
Cotati investors and self-employed buyers often hit a wall with traditional loans. Non-QM products like Bank Statement and DSCR loans bypass W-2 income verification, but they serve completely different borrowers.
Bank Statement loans work for self-employed owners who live in the property. DSCR loans ignore your personal income entirely and focus on rental cash flow. Choosing wrong costs you months and thousands in locked rates.
Bank Statement loans analyze 12-24 months of business or personal bank deposits to calculate income. Lenders typically apply a 50% expense ratio to your average monthly deposits, then use that net figure to qualify you.
These loans work for Cotati business owners, contractors, or Realtors buying a primary residence or second home. You need decent credit (usually 620+) and a down payment starting around 10-15% depending on the property type.
Rates run 1-2% higher than conventional loans. You're paying for underwriting flexibility, not for being high-risk. Most lenders cap these at owner-occupied or second homes, not pure investment properties.
DSCR loans qualify you based on one number: rental income divided by monthly mortgage payment (PITI). A ratio above 1.0 means the property pays for itself. Many lenders approve at 0.75 or higher if you put more down.
Your tax returns, pay stubs, and employment don't matter at all. Lenders care about the property's lease or market rent appraisal. This makes DSCR perfect for high-net-worth borrowers with complex tax strategies or multiple rental properties.
Cotati investors using these loans typically put down 20-25% and need 660+ credit. Rates sit slightly higher than Bank Statement loans because underwriting relies entirely on property performance, not personal income stability.
The biggest split: Bank Statement loans require proving your personal income, while DSCR loans don't care what you earn. If you're self-employed and buying a home to live in, Bank Statement is your only non-QM choice here.
Down payment and credit differ slightly. DSCR loans usually demand 20-25% down and 660+ credit. Bank Statement loans often start at 10-15% down with 620 credit, especially for primary residences.
Property type is the dealbreaker. DSCR = investment properties only. Bank Statement = owner-occupied or second homes. If you're buying a Cotati rental, DSCR wins. If you're moving into it, Bank Statement is the path.
Use Bank Statement loans if you're self-employed and buying a Cotati home to live in. Your business bank statements become your proof of income. Contractors, consultants, and small business owners make up 90% of these borrowers.
Use DSCR loans if you're buying Cotati rental property and don't want to document personal income. Perfect for investors with strong rental cash flow but messy tax returns, or W-2 earners maxing out DTI on other properties.
Both products charge premium rates versus conventional loans. Rates vary by borrower profile and market conditions. The trade-off is speed and approval odds when traditional underwriting would decline you.
Most lenders restrict Bank Statement loans to owner-occupied properties and second homes. For pure investment properties, DSCR loans are the standard non-QM product.
No. DSCR loans qualify solely on the property's rental income versus the mortgage payment. Your personal income documentation is irrelevant to approval.
Bank Statement loans typically price slightly better because they verify personal income. DSCR loans carry higher rates due to investment property risk and no personal income review.
Bank Statement loans often start at 620 credit. DSCR loans usually require 660 minimum, though some lenders go to 640 with larger down payments.
You can use Bank Statement for your primary residence and DSCR for rentals simultaneously. Each property gets underwritten independently based on its use and your qualification method.