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in Pasadena, CA
Pasadena's housing market attracts both owner-occupants and real estate investors. Conventional loans serve traditional buyers who qualify on W-2 income and plan to live in the property.
DSCR loans work differently — they qualify based on rental income, not your tax returns. Investors who own multiple properties or have complex income use DSCR to scale portfolios without personal income verification.
Conventional loans offer the lowest rates and most flexible terms. You need steady W-2 income, at least 620 credit, and typically 3-20% down depending on whether you're buying a primary residence or investment.
Lenders verify employment, income, and assets through traditional documentation. Debt-to-income ratio matters — usually capped at 45-50% including your new mortgage payment.
If you're buying a home to live in, conventional beats DSCR on rate and terms every time. Rates vary by borrower profile and market conditions, but conventional consistently prices lower than investor products.
DSCR loans ignore your tax returns entirely. Instead, lenders calculate a ratio: monthly rental income divided by monthly debt payment (PITI).
Most lenders want a DSCR of 1.0 or higher — meaning rent covers the payment. Some approve down to 0.75 if you have strong credit and reserves. Expect 20-25% down and credit scores above 660.
You can close in an LLC. You can own 10+ financed properties. You don't need to explain gaps in employment or write letters about tax write-offs. DSCR scales with your portfolio, not your W-2.
Rate spreads run 1-2% higher on DSCR compared to conventional. You pay for the flexibility. On a $600K loan, that's roughly $400-700 more per month.
Conventional maxes out at 10 financed properties. DSCR has no limit — we've closed loans for clients with 40+ doors. Conventional requires tax returns and employment verification. DSCR needs a lease and an appraisal.
For owner-occupants, conventional wins on cost. For investors with multiple properties or non-traditional income, DSCR removes the documentation barriers that stop portfolio growth.
Buy conventional if you're living in the property or qualify easily on W-2 income. The rate advantage alone saves thousands annually. Even for a rental, conventional beats DSCR if your DTI allows it.
Switch to DSCR when conventional blocks you — too many properties, self-employed income doesn't show on returns, or you want to close in an LLC. DSCR trades higher cost for zero income documentation.
In Pasadena's competitive market, some investors use conventional for the first few doors, then shift to DSCR to scale past the 10-property limit. Match the loan to your strategy, not the other way around.
No. DSCR loans are for investment properties only. If you're buying a home to live in, conventional financing offers better rates and terms.
Lenders use the appraiser's market rent opinion, not your actual lease. Strong rental comps in the appraisal determine your DSCR ratio and approval.
Yes. Most lenders require 6-12 months of reserves per property financed. More properties usually means higher reserve requirements.
Yes. Investors often refinance to DSCR to pull equity or remove income documentation requirements. Rates will increase, but flexibility improves.
Conventional works if you live in one unit and qualify on income. DSCR makes sense if you're renting all units and want to avoid personal income verification.