Loading
in Madera, CA
Madera buyers face a clear fork: conventional loans for primary residences or DSCR loans for rental properties. Your W-2 income matters for one but not the other.
Conventional financing dominates owner-occupied purchases with lower rates and standard requirements. DSCR loans ignore your tax returns entirely and qualify you on rental income alone.
Conventional loans require 620+ credit and documented income through W-2s or tax returns. Rates vary by borrower profile and market conditions but typically land 0.5-1% below investor products.
You can put down as little as 3% for a primary home in Madera. Investment properties require 15-25% down and carry higher rates than owner-occupied purchases.
Fannie Mae and Freddie Mac set the rules here. Your debt-to-income ratio can't exceed 50% in most cases, and they count all your monthly obligations against your paycheck.
DSCR loans qualify Madera investors on rental income from the property itself. Lenders pull a rent schedule or appraisal showing market rent, then divide that by your mortgage payment.
You need a DSCR of 1.0 or higher for most programs. That means monthly rent covers the full mortgage payment including taxes and insurance. Some lenders go down to 0.75 DSCR with bigger down payments.
Expect 20-25% down minimum and rates 1-2% above conventional. Credit requirements start at 660 for most lenders, though some go to 620 with compensating factors.
Income verification separates these programs completely. Conventional lenders want two years of W-2s or 1040s and call your employer. DSCR lenders don't care what you make or where you work.
Rates favor conventional by a wide margin for owner-occupants. A Madera buyer with 740 credit might get 6.5% conventional versus 8% DSCR on the same property as an investment.
Down payment requirements tighten for DSCR loans across the board. Conventional allows 3-5% down for primary homes, while DSCR starts at 20% with no exceptions for first-time investors.
Choose conventional if you're buying a primary residence in Madera or have W-2 income that qualifies you cleanly. The rate advantage alone saves thousands annually compared to investor products.
DSCR makes sense when your tax returns show low income but you're buying cash-flowing rentals. Self-employed buyers with big write-offs use these constantly because the property income qualifies itself.
Investment property buyers with strong W-2 income should still run conventional first. You'll pay less even on a rental if your documented income supports the loan amount.
No, DSCR loans only work for investment properties. You must use conventional or government financing for owner-occupied homes.
Conventional starts at 620 credit. DSCR programs typically require 660 minimum, though some lenders go to 620 with larger down payments.
Rates run 1-2% higher than conventional. A $400K loan costs roughly $300-500 more monthly with DSCR versus conventional financing.
Yes, both handle 2-4 unit properties. Conventional requires owner-occupancy of one unit while DSCR works for pure investment multi-families.
Yes, if you convert the property to your primary residence and have documented income. Most borrowers keep DSCR loans on rentals long-term.