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in La Puente, CA
La Puente investors face a clear choice: conventional loans that scrutinize your W-2 income or DSCR loans that focus on rental cash flow. Your employment type and property goals determine which path works.
Conventional loans demand stable income documentation and lower debt ratios. DSCR loans ignore your tax returns entirely and qualify you on what the property earns.
Conventional loans require two years of tax returns, W-2s, and a debt-to-income ratio under 50%. You get the lowest rates available, but lenders verify every dollar you claim.
These work best for W-2 earners or self-employed borrowers who show strong income on paper. You can buy primary homes, second homes, or investment properties up to 10 financed units.
DSCR loans qualify you based on a property's rental income divided by its monthly debt payment. If that ratio hits 1.0 or higher, you can get approved without showing tax returns or pay stubs.
You pay a rate premium versus conventional, usually 1-2% higher. But if you write off income for tax purposes or earn through multiple LLCs, DSCR loans ignore that complexity entirely.
Conventional loans check your entire financial picture: credit, income, debts, assets. DSCR loans check the property's rent against the mortgage payment and nothing else.
Rate difference runs about 1-1.5% in current markets. On a $500K loan, that costs you roughly $300-400 more per month. Rates vary by borrower profile and market conditions.
Choose conventional if you show strong W-2 income or clean self-employment returns. The lower rate saves thousands over 30 years, and you can use the loan for primary residence or rentals.
Pick DSCR if you write off most income, earn through multiple entities, or own several properties already. You trade higher rates for zero personal income headaches and faster closings.
No. DSCR loans only finance investment properties. For owner-occupied homes, you need conventional, FHA, or VA financing.
Conventional loans typically require 620 minimum, though some lenders go lower. DSCR loans usually need 660-680 for best pricing.
Most lenders want a 1.0 DSCR ratio, meaning monthly rent covers the mortgage payment. Some accept 0.75 ratios with larger down payments.
DSCR loans often close quicker because lenders skip income verification. Conventional loans take longer due to employment and tax return reviews.
Yes. Many investors refinance to DSCR once they build rental portfolios and want to avoid income documentation on future purchases.