Loading
in Clovis, CA
Clovis investors face a choice between two fundamentally different loan structures. Conventional loans use your W-2 income and tax returns. DSCR loans ignore your tax returns entirely and qualify you on rental income alone.
Most owner-occupants and small-scale landlords use conventional financing. Serious investors with multiple properties or self-employment income gravitate toward DSCR. Your tax situation determines which path makes sense.
Conventional loans offer the lowest rates and most flexible terms for borrowers with clean W-2 income. You need 620+ credit for investment properties, 15-25% down, and solid debt-to-income ratios.
Lenders verify two years of tax returns, pay stubs, and bank statements. If your tax returns show good income and you're buying 1-4 units, conventional beats DSCR on rate every time. Rates vary by borrower profile and market conditions.
The catch: your entire financial picture gets scrutinized. High write-offs that reduce taxable income also reduce borrowing power. Self-employed borrowers often can't qualify even when they have strong cash flow.
DSCR loans qualify you based on one number: monthly rent divided by monthly debt. If the property generates $3,000/month and the mortgage payment is $2,400, your DSCR is 1.25. Most lenders want 1.0 or higher.
Your tax returns don't matter. Your job doesn't matter. Lenders care about the property's ability to cover its own debt. You need 20-25% down, 660+ credit, and adequate cash reserves.
This works for investors who show low income on paper but have strong rental portfolios. The trade-off is higher rates—typically 0.75-1.5% above conventional. You're paying for underwriting flexibility.
Rate difference runs 0.75-1.5% in DSCR's favor for conventional. On a $400,000 loan, that's $200-400 more per month. Documentation requirements flip completely: conventional needs full income verification, DSCR needs rental analysis only.
Conventional caps most investors at 10 financed properties. DSCR has no property count limit. Conventional requires 25% down on 2+ investment properties. DSCR starts at 20% regardless of portfolio size.
Closing speed matters in Clovis's competitive market. Conventional takes 30-45 days with full underwriting. DSCR can close in 21 days because there's less paperwork to verify.
Use conventional if you have W-2 income, clean tax returns, and are buying your first 1-4 rental properties. The rate savings compound significantly over 30 years. You'll save tens of thousands in interest.
Switch to DSCR when your tax returns no longer support conventional qualifying. This happens when you're self-employed, have multiple properties with depreciation, or earn income through pass-through entities. The higher rate is the cost of continued expansion.
Clovis rental properties with strong fundamentals work for either loan type. The question is whether your personal income supports conventional qualifying. Run both scenarios before you decide.
Yes, but you'll pay higher rates for no benefit. Conventional will approve you at better terms if your income qualifies.
Most lenders want 1.0 or higher, meaning rent covers the mortgage payment. Some allow 0.75 with larger down payments and reserves.
Conventional typically requires 12-month leases. DSCR lenders may accept short-term rental income with proper documentation and market analysis.
Yes, refinance once your tax returns support conventional qualifying. The rate improvement often justifies refinance costs within 2-3 years.
Conventional loans rarely have prepayment penalties. DSCR loans often include 2-3 year prepayment penalties, though some lenders offer penalty-free options.