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in South Gate, CA
South Gate sits in a strong rental market where choosing the right loan type matters. Conventional loans work for owner-occupants and some small landlords. DSCR loans serve investors who buy purely for cash flow.
The core difference is how you qualify. Conventional lenders verify your W-2 income, tax returns, and debt-to-income ratio. DSCR lenders ignore your personal finances and look only at the property's rent vs mortgage payment.
Conventional loans offer the lowest rates and best terms if you can document stable income. You need 620+ credit for most programs, though 740+ gets you the sharpest pricing. Down payments start at 3% for primary homes, 15% for investment properties.
Debt-to-income caps at 50% in most cases. Lenders want two years of steady employment history. If you're moving to South Gate and buying a primary residence or second home, conventional is your default option.
DSCR loans skip income verification entirely. Instead, lenders calculate the property's monthly rent divided by the monthly mortgage payment. A ratio above 1.0 means rent covers the payment. Most lenders want 1.0-1.25 minimum depending on credit score.
You need 680+ credit and 20-25% down. South Gate investors use DSCR when they own multiple properties and can't qualify conventionally due to maxed debt ratios. Rates run 1-2% higher than conventional, but approval speed is faster with less paperwork.
Conventional verifies your entire financial picture. DSCR ignores it. If you're self-employed with complex returns or own five rentals already, DSCR eliminates the income documentation headache. If you're a salaried buyer with clean tax returns, conventional saves money on rate.
Property type matters too. Conventional allows 1-4 units for investment. DSCR works on single-family and multifamily but pricing tightens above four units. South Gate has plenty of single-family rentals where both programs compete directly.
Use conventional if you're buying a primary home in South Gate or you're an investor with provable income and room in your debt ratio. The rate savings compound over 30 years. Use DSCR if you're building a rental portfolio and personal income verification is a barrier.
Most first-time South Gate landlords start conventional on property one or two. They switch to DSCR once debt ratios max out or they go full-time into real estate and lose W-2 income. Your current situation drives the choice, not what you might do later.
Yes, but you'll pay more in rate and fees than conventional. If you have W-2 income and can qualify conventionally, do that first.
Both cover 2-4 units. Conventional maxes at four units. DSCR can go higher but pricing gets worse above four doors.
DSCR typically closes in 21-30 days because there's no employment verification. Conventional takes 30-45 days with full income documentation.
Yes. Investors often refi to DSCR when they leave W-2 jobs or need to free up debt ratio for more properties.
Conventional requires 620 minimum, though 740+ gets best pricing. DSCR needs 680 minimum, with better terms at 700+.