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in Lafayette, CA
Lafayette's stable rental market attracts both owner-occupants and investors. The loan you choose depends entirely on whether you're buying a primary residence or an income property.
Conventional loans work for most homebuyers with steady W-2 income. DSCR loans ignore your tax returns and qualify you based solely on the property's rental income potential.
Conventional loans offer the lowest rates when you're buying a home to live in. You need documented income, solid credit, and typically 5-20% down depending on whether you use PMI.
These loans cap at conforming limits ($1,249,125 for a single-family in 2026). Above that, you need a jumbo loan with stricter requirements and higher rates.
DSCR loans qualify you based on the property's ability to cover its own mortgage. Lenders calculate the debt service coverage ratio: monthly rent divided by monthly payment (PITIA).
Most lenders want a DSCR of 1.0 or higher, meaning the rent equals or exceeds the payment. You can sometimes go lower with larger down payments. No tax returns, no pay stubs, no employment verification.
The core difference is underwriting. Conventional lenders verify your income and debt-to-income ratio. DSCR lenders only care if the rent covers the mortgage based on an appraisal's rental estimate.
Rates on DSCR loans run 1-2% higher than conventional. You're paying for the flexibility of not documenting personal income. Minimum credit scores are similar—usually 620-640 for both.
Use conventional if you're buying a primary residence in Lafayette or have clean W-2 income you can document. You'll get better pricing and more lender options.
Use DSCR if you're buying an investment property and want to avoid tax return scrutiny. This works well for self-employed borrowers, investors with complex income, or those buying multiple properties quickly.
No. DSCR loans are for investment properties only. You must use conventional or another owner-occupied loan program for homes you plan to live in.
Both typically require 620 minimum. Higher scores get better pricing on both programs, especially conventional loans which tier rates more aggressively.
Yes. DSCR loans typically need 20-25% down. Conventional loans for primary homes can go as low as 3-5% down with PMI.
They use the appraisal's market rent estimate. The appraiser researches comparable rentals in Lafayette to determine what the property should rent for.
Yes, if you convert your primary home to a rental. The property must be investment-use and generate rental income to qualify for DSCR financing.