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in Calexico, CA
Calexico investors face a choice between traditional conventional financing and income-based DSCR loans. The right option depends on whether you're buying a primary residence or investment property, and how you plan to qualify.
Conventional loans require strong personal income and credit documentation. DSCR loans skip personal income verification entirely, qualifying you based on the property's rental income potential instead.
Understanding these differences helps Imperial County borrowers choose the financing that aligns with their purchase goals and financial situation.
Conventional loans are traditional mortgages not backed by government agencies. They typically offer competitive rates and flexible terms for borrowers with solid credit and documented income.
These loans work well for primary residences, second homes, and some investment properties. You'll need tax returns, pay stubs, and employment verification to qualify.
Down payments range from 3% for owner-occupied homes to 15-25% for investment properties. Strong credit scores generally secure better rates and terms.
DSCR loans qualify investors based on rental income rather than personal earnings. The lender calculates a debt service coverage ratio by dividing projected rent by the mortgage payment.
These Non-QM loans eliminate tax returns, pay stubs, and employment verification. Your approval depends on whether the rental income covers the loan payment adequately.
DSCR loans typically require 20-25% down and accept credit scores starting around 620-640. They're designed specifically for rental property investors who may have complex tax situations.
The main difference lies in qualification method. Conventional loans verify your personal income through W-2s and tax returns. DSCR loans ignore personal income completely, focusing only on rental cash flow.
Property restrictions differ significantly. Conventional loans work for primary residences, second homes, and investments. DSCR loans are strictly for non-owner-occupied rental properties.
Down payment requirements vary by loan purpose. Conventional offers 3% down for primary homes but 15-25% for rentals. DSCR loans consistently require 20-25% down since they're investment-only.
Rates vary by borrower profile and market conditions. Conventional loans often provide lower rates for well-qualified borrowers. DSCR rates may be slightly higher but offer approval flexibility for complex income situations.
Choose conventional financing if you're buying a primary residence or have straightforward W-2 income. These loans offer competitive rates and lower down payments for owner-occupied properties in Calexico.
DSCR loans make sense for self-employed investors, those with multiple properties, or anyone whose tax returns don't reflect their true income. If the rental property generates sufficient income to cover the mortgage, you can qualify.
Consider your investment strategy for Imperial County properties. Portfolio investors often prefer DSCR loans because they can acquire multiple properties without personal income limiting their purchasing power.
Working with a California broker who understands both options helps you structure the best financing for your specific situation and long-term goals.
No, DSCR loans are strictly for non-owner-occupied investment properties. If you plan to live in the property at all, you'll need conventional or other owner-occupied financing options.
Rates vary by borrower profile and market conditions. Conventional loans typically offer lower rates for qualified borrowers, while DSCR loans may have slightly higher rates due to their flexible qualification approach.
Not necessarily. DSCR lenders use projected market rent based on an appraisal or rent schedule. You don't need existing rental income on the property you're purchasing.
Yes, but they need two years of tax returns showing adequate income. If your write-offs reduce taxable income significantly, DSCR loans may offer easier qualification based on property income instead.
Most lenders require a ratio of 1.0 or higher, meaning rental income equals or exceeds the mortgage payment. Some programs accept ratios as low as 0.75 with larger down payments.