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in Corcoran, CA
Conventional loans and DSCR loans serve completely different buyers in Corcoran. One is for people buying a home to live in. The other is for landlords who want to skip personal income verification.
Most first-time buyers use conventional financing. Investors buying rental property often prefer DSCR loans because approval hinges on rent, not W-2s.
Conventional loans require proof of personal income, steady employment, and decent credit. You'll need a 620 credit score minimum and typically 3-5% down for a primary residence in Corcoran.
Fannie Mae and Freddie Mac back these loans. That means tight underwriting but competitive rates. If you're buying a home to live in, this is usually your best option.
DSCR loans ignore your tax returns and pay stubs. Lenders care about one thing: does the property generate enough rent to cover the mortgage? That ratio is your debt service coverage ratio.
You'll need at least a 1.0 DSCR, meaning rent equals or exceeds the monthly payment. Most lenders want 1.25. Credit minimums run 660-680, and expect 20-25% down.
Conventional loans cost less upfront and over time. Rates run lower, down payments start smaller, and mortgage insurance drops off eventually. But you're stuck proving income to an underwriter who'll scrutinize every deposit.
DSCR loans cost more but skip the income drill. Rates typically run 1-2% higher than conventional. You need a bigger down payment. But if you're self-employed or buying multiple properties, the higher cost beats the hassle of traditional underwriting.
Use conventional if you're buying a home to live in. The lower rates and down payment requirements save real money. You'll need two years of W-2s or tax returns, but that's standard.
Use DSCR if you're buying rental property and don't want to document income. This works for self-employed buyers, retirees with assets but low reported income, or anyone building a portfolio. The property needs to pencil at 1.25 DSCR minimum.
No. DSCR loans are for investment properties only. You must rent the property to a tenant to qualify.
Conventional loans require 620 minimum. DSCR loans typically need 660-680 depending on the lender.
Conventional loans offer lower rates. DSCR rates run 1-2% higher due to investor risk and non-QM pricing.
Yes, with 20% down on both. Conventional requires PMI below that threshold. DSCR often avoids MI but charges higher base rates instead.
Most lenders require 6-12 months of reserves. Conventional loans need less, sometimes zero for owner-occupants.