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in Pico Rivera, CA
Pico Rivera investors face a clear choice: use your W-2 income or let the property qualify itself. Conventional loans reward strong borrowers with lower rates. DSCR loans ignore your tax returns entirely and focus on rental cash flow.
Most primary home buyers in Pico Rivera choose conventional financing. Real estate investors buying multi-family properties or single-family rentals often need DSCR loans because their personal income doesn't support another mortgage.
Conventional loans offer the most competitive rates and lowest fees. You need documented income, 620+ credit, and cash reserves. These loans work for primary homes, second homes, and investment properties up to four units.
Most Pico Rivera conventional borrowers put down 5-20% depending on occupancy. Investment properties require 15-25% down. Lenders verify your DTI stays below 50%, which means your monthly debts plus new mortgage can't exceed half your gross income.
DSCR loans qualify you based on rent collected versus mortgage payment. Lenders want a DSCR of 1.0 or higher, meaning rent covers the full PITI payment. Your personal income, job history, and tax returns don't matter. This opens financing for self-employed borrowers and portfolio investors.
Expect 20-25% down and rates 1-2% above conventional. No income verification means faster closings and simpler paperwork. Pico Rivera investors use DSCR loans when they already own multiple rentals or show low taxable income due to depreciation.
Income verification separates these programs. Conventional lenders pull two years of tax returns, W-2s, and pay stubs. DSCR lenders pull a rent schedule or appraisal showing market rent. If your tax returns don't support another mortgage, DSCR wins.
Rates favor conventional by a wide margin. A borrower with 740 credit might get 6.5% conventional versus 8.0% DSCR in current conditions. That spread costs about $200 monthly on a $400k loan. You pay for the flexibility of no income docs.
Choose conventional if you have W-2 income and want the lowest rate. This works for most first-time investors in Pico Rivera buying a duplex or triplex. Your DTI needs room and your income needs to be stable for two years.
Choose DSCR if you're self-employed, own multiple rentals, or write off significant business expenses. The higher rate hurts less than being denied for low taxable income. We see this most with 1099 contractors and business owners buying cash-flowing properties in South El Monte and nearby markets.
No. DSCR loans only work for investment properties that generate rental income. Primary homes require conventional, FHA, or VA financing.
Most lenders want 1.0 or higher, meaning rent covers the full mortgage payment. Some accept 0.75 DSCR with larger down payments and higher rates.
Yes. Conventional loans price 1-2% lower because of full income verification. Rates vary by borrower profile and market conditions.
Typically the same 20-25% as conventional investment loans. The difference is in qualification method, not down payment size.
You can refinance once your income supports conventional approval. Many investors start with DSCR and refi after two years to capture lower rates.