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in Cerritos, CA
Cerritos investors face a clear choice: conventional loans for personal income qualification or DSCR loans based purely on rental numbers. The right pick depends on whether you're buying to live in the property or purely for cash flow.
Conventional loans offer lower rates and standard terms but require W-2s and tax returns. DSCR loans skip personal income entirely, qualifying you on the property's rent-to-payment ratio instead.
Conventional loans are the default choice for Cerritos homebuyers and investors with clean W-2 income. You'll need 620+ credit, standard debt ratios under 50%, and verifiable employment history.
Rates run 0.5-1% lower than DSCR programs, and you can put down as little as 3% on a primary residence. Investment properties require 15-25% down and slightly higher rates.
DSCR loans let Cerritos investors buy rentals without showing personal income. Lenders approve based on whether monthly rent covers the mortgage payment plus taxes and insurance.
You need a 1.0+ debt service coverage ratio, meaning rent must equal or exceed PITIA. Expect 20-25% down, 640+ credit, and rates 1-2% above conventional pricing.
Income verification is the main split. Conventional lenders want two years of W-2s and tax returns showing stable employment. DSCR programs ignore your personal income completely and calculate approval from an appraisal with rent schedule.
Rates and down payments favor conventional loans. You'll pay 4-5% less in interest over the loan life with conventional financing, but DSCR programs approve deals that conventional underwriting would decline based on debt ratios.
Use conventional loans for your Cerritos primary residence or if you're a W-2 earner buying a rental with room in your debt ratios. The rate savings add up to tens of thousands over 30 years.
Pick DSCR loans when you're self-employed with complex tax returns, own multiple rentals already, or want to qualify on property performance instead of personal finances. The premium you pay buys approval flexibility that conventional lenders can't offer.
No. DSCR loans are investment-only products requiring rental income to qualify. You must use conventional financing for owner-occupied properties.
DSCR loans often close quicker since they skip employment and income verification. Conventional loans need more documentation but still close in 21-30 days with responsive borrowers.
Yes, but DSCR lenders are pickier about condo approval and investor concentration ratios. Conventional loans have clearer condo guidelines through Fannie Mae and Freddie Mac.
Absolutely. Many Cerritos investors refinance to DSCR loans after converting a primary residence to a rental. You'll pay higher rates but remove personal income requirements.
DSCR loans have no hard cap on financed properties. Conventional financing maxes out at 10 financed properties total, making DSCR essential for serious portfolio growth.