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in Delano, CA
Delano property buyers face a key financing decision: conventional loans or DSCR loans. Your choice depends on whether you're buying a primary residence or an investment property.
Conventional loans work well for owner-occupied homes and require traditional income documentation. DSCR loans serve real estate investors who want to qualify based on rental income instead of personal earnings.
Understanding these differences helps Delano buyers choose the right financing for their situation. Each loan type has distinct requirements, benefits, and ideal use cases.
Conventional loans represent traditional mortgage financing without government backing. Lenders evaluate your credit score, income, employment history, and debt-to-income ratio.
These loans typically require a 620+ credit score and proof of steady income through W-2s or tax returns. Down payments start at 3% for primary residences, though 20% down avoids private mortgage insurance.
Delano buyers using conventional financing access competitive rates and flexible terms. You can finance primary homes, second homes, or investment properties with up to 10 financed properties total.
DSCR loans qualify real estate investors based on rental property income rather than personal income. The Debt Service Coverage Ratio compares monthly rent to the mortgage payment.
These Non-QM loans skip W-2s and tax returns entirely. Instead, lenders review the property's rental income through lease agreements or market rent analysis.
Delano investors typically need 20-25% down and a 660+ credit score for DSCR loans. The property must generate enough rental income to cover the mortgage payment, ideally with a DSCR of 1.0 or higher.
The qualification process separates these loan types completely. Conventional loans require proving your personal ability to repay through income verification. DSCR loans prove repayment ability through the property's rental income potential.
Property use creates another major distinction. Conventional loans work for primary residences, second homes, and rentals. DSCR loans exclusively finance investment properties and cannot be used for owner-occupied homes.
Rates vary by borrower profile and market conditions, but DSCR loans typically carry slightly higher rates due to their investor focus and flexible qualification. Conventional loans generally offer lower rates for borrowers with strong credit and income documentation.
Choose conventional loans when buying a primary residence in Delano or when you have strong W-2 income and credit. These loans offer the most competitive rates and lowest down payment options for owner-occupied properties.
DSCR loans work best for Delano investors buying rental properties who want to avoid income documentation. Self-employed investors, those with multiple properties, or buyers whose personal debt-to-income ratio is maxed out benefit most from DSCR financing.
Your property plans determine the winner. Planning to live in the home? Conventional is your only option. Building a rental portfolio with properties that generate strong income? DSCR loans provide flexibility and scalability without income limits.
No. DSCR loans exclusively finance investment properties. You must use a conventional loan or other financing for primary residences or second homes in Delano.
Rates vary by borrower profile and market conditions. Conventional loans typically offer lower rates for qualified borrowers due to their traditional structure and broader market appeal.
No. DSCR loans skip W-2s, pay stubs, and tax returns entirely. Qualification depends solely on the rental property's income and your credit profile.
Conventional loans start at 3% down for primary residences. DSCR loans typically require 20-25% down for investment properties, reflecting their higher risk profile.
Yes. DSCR loans have no limit on the number of financed properties. Each property qualifies based on its own rental income, making portfolio building easier than conventional financing.