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in Clearlake, CA
Clearlake draws investors for its waterfront rentals and affordable properties. Conventional loans work for owner-occupants and some investors with strong W-2 income.
DSCR loans flip the script entirely—they ignore your tax returns and qualify you on rental income alone. Most Clearlake investors who own multiple properties choose DSCR because it doesn't cap their buying power.
Conventional loans require W-2 income, tax returns, and a debt-to-income ratio under 50%. You'll need 620+ credit and at least 3% down for owner-occupants or 15% for investment properties.
Rates stay competitive because Fannie Mae and Freddie Mac back these loans. But the income requirements kill most self-employed borrowers and anyone with multiple rental mortgages on their credit report.
DSCR loans care about one number: does the rental income cover the mortgage payment? Lenders calculate the debt service coverage ratio by dividing monthly rent by the PITIA payment.
You need 1.0+ DSCR for most programs, though some lenders go to 0.75 with higher rates. No tax returns, no paystubs, no explanation of your business losses. Just rent comparables and 20-25% down.
Conventional loans look at your entire financial picture. DSCR loans only look at the property's income potential. That difference matters in Clearlake where rents can justify purchases that wouldn't qualify under traditional DTI.
Rate spreads run 0.5-1.5% higher on DSCR. You're paying for flexibility. Conventional caps you at 10 financed properties. DSCR has no limit—I've closed borrowers with 40+ rental mortgages.
Choose conventional if you're buying your first rental, have clean W-2 income, and want the lowest rate. The documentation burden is real but manageable for traditional employees.
Go DSCR if you're self-employed, already own multiple rentals, or can't show enough income on tax returns. Clearlake's rental market supports DSCR math—most properties hit 1.0+ ratios with market rents.
Yes, lenders use a rent schedule from a licensed appraiser. The appraiser pulls local comps to estimate market rent for your property.
DSCR lets you scale past 10 properties and ignores personal income. Most investors hit those limits fast in affordable markets like Clearlake.
Some lenders allow it, but they'll discount the income or require 1.25+ DSCR. Check Lake County's STR regulations before you buy.
Absolutely. Many investors start conventional for the rate, then refi to DSCR when they need to free up income capacity for the next deal.
Conventional requires 620+ for investment properties. DSCR typically needs 660+ though some lenders go to 640 with larger down payments.