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in Sierra Madre, CA
Sierra Madre's single-family homes attract both primary buyers and real estate investors. The loan you choose depends on whether you're moving in or renting out.
Conventional loans work for owner-occupants with W-2 income. DSCR loans qualify on rental income alone, no tax returns needed.
Conventional loans underwrite based on your personal income, credit score, and debt-to-income ratio. You'll need steady employment and tax returns showing enough income to cover the mortgage.
Rates run lower than investor programs, and you can put down as little as 3% on a primary home. Investment properties require 15-25% down and slightly higher rates.
DSCR loans skip personal income verification entirely. Approval depends on whether the property's rental income covers the mortgage payment by a certain margin, typically 1.0 to 1.25 times.
This works for self-employed investors, retirees with portfolio income, or anyone who doesn't want to use tax returns. You'll need 20-25% down and accept rates 1-2% higher than conventional.
The core difference is what the lender looks at. Conventional loans care about your job and income. DSCR loans care about the property's rental income and nothing else.
Conventional wins on rate and cost. DSCR wins on simplicity for investors who can't or don't want to document personal income. You pay for that convenience with higher rates and bigger down payments.
Choose conventional if you're buying a primary home or have clean W-2 income to document. The lower rate saves thousands over the loan term.
Pick DSCR if you're acquiring a rental property and either can't show traditional income or own multiple properties that complicate your debt ratio. The rental income does the talking.
No. DSCR loans only finance investment properties. Primary homes require conventional, FHA, or other owner-occupant programs.
Conventional loans require 620 minimum. DSCR loans typically need 640-680, depending on the lender and down payment size.
Lenders divide monthly rental income by the mortgage payment. A ratio of 1.0 or higher usually qualifies, though some require 1.25.
DSCR often closes quicker because there's no income documentation to gather. Conventional timelines depend on how fast you provide pay stubs and tax returns.
Yes. Investors often refi into DSCR once they own multiple properties and their debt ratio makes conventional approval harder.