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in Commerce, CA
Commerce sits in a prime industrial corridor with strong rental demand from warehouse workers and logistics employees. If you're buying a rental property here, your financing choice determines how much you qualify for and what documentation you need.
Conventional loans verify your W-2 income and personal debt ratios. DSCR loans ignore your tax returns entirely and qualify you based on the property's rental income alone.
Conventional loans require paystubs, W-2s, and tax returns showing steady employment income. Lenders cap your total debt payments at 45-50% of gross monthly income, including the new rental property.
You need 15% down for a single-unit investment property, 25% down for 2-4 units. Credit scores below 680 face rate increases or denial.
Rates typically run 0.5-0.75% lower than DSCR loans because you're proving personal income stability. Underwriters verify employment, assets, and credit history in detail.
DSCR loans skip personal income verification completely. Underwriters calculate the property's monthly rent divided by its total housing payment including principal, interest, taxes, insurance, and HOA fees.
You need a DSCR ratio above 1.0 for best pricing, meaning rent covers the full payment. Ratios between 0.75-1.0 still get approved but carry higher rates.
Minimum 20% down for single-family rentals, 25% for multi-unit properties. Credit scores start at 640, though 680+ gets better terms. No employment verification, no tax returns, no debt-to-income calculations.
The core split is documentation versus simplicity. Conventional loans require full financial disclosure but reward it with lower rates. DSCR loans ask fewer questions but charge 0.5-1.25% more in interest.
Conventional loans count against your debt-to-income ratio, limiting how many properties you can finance. DSCR loans don't touch your DTI, letting you scale a rental portfolio without personal income constraints.
In Commerce's rental market, DSCR loans shine for investors with multiple properties or self-employment income that looks weak on tax returns. Conventional loans win for W-2 earners buying their first or second rental.
Choose conventional if you're a W-2 employee with clean tax returns and fewer than 4 financed properties. The rate savings add up significantly over 30 years, especially on Commerce properties where rents may not always cover conventional payments.
Pick DSCR if you own multiple rentals, show low taxable income, or work 1099 contracts. You'll pay more in interest but qualify based purely on whether the Commerce property's rent covers its payment.
For properties renting near $2,000-$2,500 monthly in Commerce, calculate the DSCR carefully. If rent barely covers the payment, expect rates closer to 8-9% versus 7-7.5% on conventional financing. Rates vary by borrower profile and market conditions.
Yes, lenders accept appraisal rent schedules for vacant properties. The appraiser estimates market rent based on comparable Commerce rentals, then we calculate DSCR from that figure.
You can finance up to 10 properties with conventional loans. After 4 financed properties, reserve requirements increase and some lenders exit, shrinking your options.
DSCR loans typically close 3-5 days faster because there's no employment verification or income documentation. Conventional loans need VOE callbacks and tax transcript pulls that add time.
Yes, many investors refinance to DSCR once they own multiple properties and need to free up debt-to-income capacity. You'll trade a higher rate for unlimited scaling room.
Conventional investment loans start at 620 but realistically need 680+ for competitive rates. DSCR loans approve at 640 with 700+ unlocking better pricing tiers.