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in Paramount, CA
Paramount's rental market attracts both traditional homebuyers and investors, but the loan you need depends on your situation. Conventional loans serve W-2 buyers purchasing a primary residence or second home, while DSCR loans help investors qualify based on rental income alone.
Most Paramount buyers start with conventional financing for lower rates and standard terms. Real estate investors turn to DSCR when their tax returns don't show enough income or they're building a portfolio that exceeds conventional limits.
Conventional loans follow Fannie Mae and Freddie Mac guidelines. You need documented income through W-2s or tax returns, plus credit scores starting at 620 (620-640 barely works). Rates stay competitive because these loans carry less lender risk.
Down payments start at 3% for first-time buyers and 5% for repeat buyers on primary homes. Investment properties require 15-25% down. You can finance up to 10 properties, but each one adds to your debt-to-income calculation.
DSCR loans ignore your W-2 income and tax returns entirely. Underwriters look at one number: does the property's rent cover the mortgage payment? A DSCR of 1.0 means rent equals the payment. Most lenders want 1.1-1.25 to approve the loan.
These loans require 20-25% down and carry interest rates 1-2% higher than conventional. Credit score minimums hover around 660-680. There's no limit on how many properties you can finance, making DSCR popular with investors scaling portfolios quickly.
The income requirement splits these loans completely. Conventional underwriting pulls two years of tax returns and calculates your debt ratios. DSCR skips all that and orders a rent schedule from an appraiser instead.
Rates favor conventional by a clear margin. A Paramount buyer with 740 credit might lock 6.5% conventional versus 8% DSCR on the same property. That gap widens if your credit drops below 700. Conventional also offers better cash-out refinance rates when you want to pull equity later.
Choose conventional if you're buying a primary home or you show strong income on tax returns. The rate savings compound over 30 years. Even investors should use conventional for their first few rentals if their debt ratios allow it.
Go DSCR when you write off so much income that conventional underwriting rejects you despite owning profitable rentals. Also use DSCR when you're past the 10-property conventional limit or buying a property that needs immediate tenant placement to qualify.
No. DSCR loans only work for investment properties that generate rental income. You need conventional, FHA, or another program for a home you'll occupy.
Most lenders want 1.0 minimum, with 1.1-1.25 preferred. That means monthly rent should exceed the full mortgage payment including taxes and insurance by 10-25%.
Yes. DSCR typically needs 20-25% down while conventional investment properties start at 15%. Primary residence conventional loans drop to 3-5% down.
DSCR often closes quicker because there's less income documentation. Conventional takes longer when self-employed borrowers need extensive tax return analysis.
Yes, if your income and credit qualify. Refinancing from DSCR to conventional lowers your rate but requires full income documentation you originally avoided.