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in Lancaster, CA
Lancaster investors face a clear choice between conventional loans and DSCR financing. Conventional loans reward strong personal credit and W-2 income. DSCR loans ignore your tax returns and qualify you on rental income alone.
The right choice depends on whether you're buying a primary residence or building a rental portfolio. Most owner-occupants default to conventional. Real estate investors often find DSCR loans unlock deals that conventional underwriting would kill.
Conventional loans are the mortgage industry workhorse. You need a 620+ credit score, documented income, and down payments as low as 3% for owner-occupants. Investment properties require 15-25% down depending on how many you already own.
Rates run lower than most alternatives because these loans trade on secondary markets. Lenders verify every pay stub, tax return, and bank statement. If your income looks clean on paper and your DTI stays under 50%, conventional financing typically wins on cost.
DSCR loans flip the qualification model. Lenders pull your credit but never request tax returns or pay stubs. They calculate the property's monthly rent divided by its total monthly debt. A ratio above 1.0 means the property pays for itself.
You need a 660+ credit score and 20-25% down for most DSCR deals. Rates run 0.5-1.5% higher than conventional, but you can close without proving personal income. Self-employed borrowers and investors with multiple properties find this worth the rate premium.
Income verification separates these products entirely. Conventional underwriters want two years of tax returns, recent pay stubs, and W-2s. DSCR lenders want a lease agreement and rent comp analysis. One qualifies you, the other qualifies the property.
Down payment and rate gaps matter in Lancaster's price ranges. Conventional offers 3% down for owner-occupants but 15-25% for investors. DSCR starts at 20-25% regardless of occupancy. Expect DSCR rates to run 50-150 basis points higher than conventional for comparable credit profiles.
Choose conventional if you're buying a primary residence or have clean W-2 income. The lower rates and down payment options beat DSCR financing for owner-occupants. Investment buyers with straightforward income should run conventional numbers first.
DSCR loans make sense when your personal income complicates qualification. Self-employed borrowers who write off heavy expenses, investors with multiple properties pushing DTI limits, and anyone building a portfolio fast should explore DSCR. The property income stands alone.
No. DSCR loans finance investment properties only. Primary residences require conventional, FHA, or other owner-occupant programs with personal income verification.
Most lenders want 1.0 or higher, meaning rent covers the full mortgage payment. Some allow 0.75 ratios with larger down payments and higher credit scores.
Yes. Expect 6-12 months of mortgage payments in reserves depending on credit score and property count. Conventional loans require similar reserves for investment properties.
Absolutely. Investors refinance to DSCR when buying more properties and need to remove personal income from qualification. Rates vary by borrower profile and market conditions.
DSCR often closes quicker because there's no income verification. Conventional deals with clean documentation typically close in 21-30 days when everything's organized upfront.