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in Kerman, CA
Kerman investors face a clear choice: conventional loans for owner-occupants and low-leverage investors, or DSCR loans for those buying purely on rental numbers. Your employment situation and how you plan to use the property determines which path works.
Conventional loans verify your W-2 income and debt ratios. DSCR loans ignore your tax returns entirely and qualify you on what the property earns. Most Kerman buyers default to conventional, but real estate investors often can't qualify that way.
Conventional loans require clean W-2 income, decent credit, and a debt-to-income ratio under 50%. You'll need 3-5% down for owner-occupied homes in Kerman, 15-25% for investment properties. Rates are typically 0.5-1% lower than non-QM options.
Your tax returns, pay stubs, and employment history all get verified. Lenders want to see stable income and reasonable debt. These loans work great if you're buying a primary residence or have traditional employment that shows well on paper.
DSCR loans ignore your personal income completely. Lenders only care if the Kerman property's rent covers the mortgage payment plus taxes and insurance. You need a debt service coverage ratio above 1.0, meaning rent exceeds the total monthly housing cost.
Expect 20-25% down minimum and rates roughly 1-1.5% higher than conventional. No tax returns, no pay stubs, no employment verification. Self-employed borrowers and investors with multiple properties use these when conventional underwriting doesn't work.
The fundamental split is underwriting method. Conventional loans scrutinize your entire financial life. DSCR loans only check your credit score and whether the rent covers the payment. You can close a DSCR loan without the lender ever knowing what you earn.
Rates and down payments reflect this difference. Conventional loans reward clean income documentation with better pricing. DSCR loans charge more because they take on risk without verifying your ability to cover the mortgage if the property sits vacant.
Use conventional if you're buying your Kerman home to live in, or if you're a W-2 earner with low debt investing in rental property. The lower rates save you thousands over the loan term. Most first-time buyers and primary residence purchases go conventional by default.
Switch to DSCR if you're self-employed with write-offs that tank your taxable income, own multiple rentals already, or simply don't want to hand over tax returns. You'll pay more upfront and monthly, but you'll actually get approved. The extra cost beats not qualifying at all.
No. DSCR loans are investment-property only. You must rent out the Kerman property to qualify based on its income.
Conventional loans start at 620 credit. DSCR loans typically require 660-680 minimum depending on the lender and down payment.
DSCR loans often close quicker because there's no employment verification or income documentation. Expect 3-4 weeks vs 4-6 for conventional.
Yes. Investors often buy with conventional for the rate, then refinance to DSCR when acquiring more properties to avoid income verification on later deals.
Yes, but DSCR cash-out loans require the new payment to still be covered by rent. Conventional cash-out refinances check your debt-to-income ratio.