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in Lawndale, CA
Lawndale investors face a clear choice: qualify on your W-2 income or let the property pay for itself. Conventional loans work great if you have stable employment and can show tax returns.
DSCR loans flip the script entirely. They ignore your personal income and approve you based on whether rent covers the mortgage. Different tools for different scenarios.
Conventional loans require full income documentation and strong credit. You'll need pay stubs, tax returns, and typically 620+ credit for investment properties.
Rates run lower than most investor options, usually 0.5-1% below DSCR pricing. You can put down 15% on a single investment property, 25% on multiple units. Fannie Mae caps you at 10 financed properties total.
DSCR loans skip the tax returns completely. The lender calculates monthly rent divided by the proposed mortgage payment. That ratio needs to hit 1.0 or higher, meaning rent equals or exceeds the full payment.
Most investors need 20-25% down, sometimes more if the property barely cash flows. Credit requirements stay similar to conventional, around 620-640 minimum. No property count limits, which matters if you're scaling past 10 units.
The rate gap hits hard over 30 years. Conventional might price at 7%, DSCR at 8.25%. On a $500K loan, that's $260 more per month. But DSCR doesn't care if your tax returns show losses from depreciation.
Conventional taps out at 10 financed properties. DSCR keeps going as long as each property cash flows. If you're buying your second rental, conventional wins on rate. If you're building a portfolio or show low taxable income, DSCR opens doors conventional slams shut.
Pick conventional if you have W-2 income, clean tax returns, and fewer than 10 financed properties. The lower rate saves real money. Most first-time Lawndale investors fit this profile perfectly.
Go DSCR if you're self-employed with lots of write-offs, already own multiple rentals, or can't document income traditionally. The higher rate costs less than not qualifying at all. I see this most with 1099 contractors and portfolio builders.
Yes, but the property needs an appraisal with a rent schedule. Most lenders use 75% of market rent to calculate your DSCR ratio.
DSCR often closes quicker since there's no employment verification or tax return review. Expect 21-30 days versus 30-45 for conventional with full docs.
Yes. Conventional works up to 4 units with slightly higher down payments. DSCR handles 1-4 units with the same qualification method regardless of size.
Absolutely. Many investors refinance to DSCR after hitting the 10-property conventional limit. You'll pay a higher rate but unlock more capacity.
Conventional might still approve you on personal income. DSCR requires the rent to cover the payment, so marginal cash flow kills the deal.