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in Palmdale, CA
Palmdale real estate attracts both owner-occupants and rental investors. The loan you choose depends on whether you're buying to live there or to collect rent.
Conventional loans work well for primary residences and some investment properties. DSCR loans skip personal income verification and focus entirely on rental cash flow.
Conventional loans verify your income through W-2s, tax returns, and pay stubs. Lenders analyze your debt-to-income ratio and credit score to determine approval.
You can put as little as 3% down on a primary residence. Investment properties require 15-25% down. Rates vary by borrower profile and market conditions.
These loans carry strict documentation standards. Underwriters scrutinize employment history, assets, and credit. If your income is steady and documented, approval is straightforward.
DSCR loans approve you based on the property's rental income, not your W-2 or tax returns. Underwriters calculate the debt service coverage ratio by dividing rent by the mortgage payment.
A DSCR of 1.0 or higher means the rent covers the payment. Many lenders accept ratios as low as 0.75 with larger down payments. You typically need 20-25% down.
These loans work for investors who can't document traditional income or who own multiple rentals. Rates run higher than conventional, but approval depends entirely on the property's cash flow.
Conventional loans verify your personal income and calculate debt-to-income ratios. DSCR loans ignore your income entirely and focus on whether the rent covers the mortgage.
Down payment minimums differ sharply. Conventional allows 3% down for owner-occupants, 15% for investors. DSCR requires 20-25% regardless of property type.
Rates favor conventional financing by a significant margin. DSCR loans carry higher interest costs because they're non-QM products with more flexible underwriting.
Choose conventional if you're buying a primary home or have clean W-2 income and strong credit. You'll get better rates and more flexible down payment options.
Pick DSCR if you're an investor with complex tax returns, multiple properties, or self-employment income that doesn't show well on paper. The rental property needs to cash flow.
I see Palmdale investors use DSCR when they already own several rentals and can't qualify conventionally due to DTI limits. The property's income gets them approved when traditional underwriting won't.
No. DSCR loans are strictly for investment properties that generate rental income. Primary residences don't qualify because there's no rent to cover the debt service.
Conventional loans typically require 620 minimum. DSCR loans usually need 680 or higher, with better terms available at 720+.
Expect a 1-2% rate premium on DSCR loans. Rates vary by borrower profile and market conditions, but DSCR pricing reflects the non-QM risk profile.
Yes. DSCR loans don't count against your DTI, so you can stack multiple properties as long as each one cash flows and you have enough down payment capital.
Yes. Lenders need a lease agreement or appraisal with rent schedule to verify the property's income. No personal income docs, but property income must be proven.