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in El Segundo, CA
El Segundo's mix of owner-occupied homes and investment properties means buyers here need different financing strategies. Conventional loans dominate primary residence purchases, while DSCR loans handle most investor deals.
The choice isn't about which loan is better—it's about matching the loan to your situation. Your employment status, investment goals, and property type determine which option actually gets you approved.
Conventional loans offer the lowest rates available—usually 0.5% to 1% below investor products. You'll need documented income, 620+ credit, and typically 5-20% down depending on whether it's a primary residence or investment property.
These loans work best for W-2 earners buying a home to live in. Debt-to-income ratios cap at 50%, so your total monthly debts can't exceed half your gross income. Closing happens in 21-30 days with standard documentation.
DSCR loans ignore your W-2 income entirely. Approval depends on whether the property's rent covers the mortgage payment—lenders want a ratio of 1.0 or higher. You'll pay 20-25% down and accept rates 1-2% above conventional.
This is the go-to loan for self-employed investors, business owners with complex returns, or anyone buying multiple rentals. No income docs, no tax returns, no DTI calculations. The property either cash flows or it doesn't.
Conventional loans scrutinize your personal finances—every pay stub, bank statement, and debt payment. DSCR loans look at one thing: the property's rent-to-payment ratio. This fundamental difference determines which borrowers can qualify.
Rate spreads matter. Conventional loans in the 6-7% range typically mean DSCR loans sit at 7.5-9%. On a $750,000 loan, that's $400-600 more per month. But if you can't document stable W-2 income, the DSCR rate is the only rate you'll get.
Buy a primary residence with W-2 income? Conventional wins on rate and down payment. Buy an investment property with documented income? Still conventional—you'll save thousands in interest even with a higher investor down payment.
DSCR makes sense in three situations: you're self-employed with write-offs that tank your taxable income, you're buying multiple rentals and hit DTI limits, or you want zero personal income in the deal. The higher rate is the cost of qualification flexibility.
Yes, but you'll need 15-25% down and lenders will count the full mortgage payment against your DTI. If you have strong W-2 income and can document the rental income, conventional rates beat DSCR by 1-2%.
Most DSCR lenders want 660-680 minimum versus 620 for conventional. You're compensating for no income verification with stronger credit and larger down payment.
Rent needs to equal or exceed your total monthly payment—principal, interest, taxes, insurance, and HOA. A 1.0 DSCR means the property breaks even. Most deals need 1.1-1.25 to get approved.
Yes, if you start documenting W-2 income and meet conventional standards. Most investors refinance after 6-12 months to capture lower rates once their income situation stabilizes.
Conventional takes 21-30 days with full underwriting. DSCR can close in 14-21 days since there's no income verification—just property appraisal and rent analysis.