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in Sebastopol, CA
Self-employed borrowers and real estate investors in Sebastopol often hit walls with conventional loans. Bank statement and DSCR loans both skip W-2 verification, but they solve different problems.
Bank statement loans qualify you based on personal cash flow. DSCR loans ignore your income entirely and qualify on rental property performance alone.
Bank statement loans use 12 to 24 months of business or personal bank deposits to calculate income. Lenders average your monthly deposits and apply an expense ratio, typically 25% to 50%, to determine qualifying income.
This works for contractors, business owners, or anyone who shows strong cash flow through their accounts. You need decent credit, usually 620 minimum, and 10% to 20% down depending on the property type.
The underwriter looks at deposit consistency and account activity patterns. Large one-time deposits get scrutinized or excluded from income calculations.
DSCR loans qualify you on one thing: rental income versus the mortgage payment. If the property generates enough rent to cover the debt, you qualify—even if you show zero personal income.
Lenders calculate debt service coverage ratio by dividing monthly rent by the total housing payment. A ratio of 1.0 means rent equals the payment. Most lenders want 1.0 or higher, though some approve at 0.75 with larger down payments.
This is an investor-only product. The property must be a rental, and you cannot live there. Personal income and employment never enter the equation.
The split is simple: bank statement loans serve business owners buying homes to live in. DSCR loans serve investors building rental portfolios in Sebastopol.
Bank statement loans require proving your personal income through deposits. DSCR loans require proving the property pays for itself through rent. Rate pricing is similar on both, typically 1% to 2% above conventional rates.
Down payment requirements overlap but differ in motivation. Bank statements usually need 15% down for owner-occupied properties. DSCR loans start at 20% for investment properties, sometimes 25% if the DSCR falls below 1.0.
Choose bank statement if you run a business and want to buy a primary residence or second home in Sebastopol. Your bank deposits need to show consistent cash flow that supports the mortgage payment after expense deductions.
Choose DSCR if you're acquiring rental property and the deal works on paper—rent covers debt. Your W-2 job, business income, or tax return losses don't kill the deal because underwriters never see them.
Some borrowers use both. A contractor might use bank statements for a personal home purchase, then switch to DSCR loans for investment properties around Sonoma County.
Yes, bank statement loans work for investment properties. But if the rental income alone qualifies the deal, DSCR is cleaner because it skips personal income review entirely.
Rates run similar on both, typically 1% to 2% above conventional. DSCR pricing improves with higher ratios; bank statement pricing improves with higher credit scores.
No. Bank statement loans replace tax returns with deposit history. DSCR loans ignore your tax returns completely and underwrite the property's rental performance.
Both programs typically require 620 minimum. You'll see better pricing and lower down payment options once you hit 680 or higher.
Yes. Lenders will count existing rental income when qualifying a bank statement loan. DSCR loans evaluate each property independently without cross-collateralizing.