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in Mill Valley, CA
Mill Valley's rental market attracts both owner-occupants and investors, but the right loan depends on how you plan to use the property. Conventional loans dominate primary residence purchases while DSCR loans serve landlords who want approvals based on rent, not paystubs.
Most Mill Valley buyers default to conventional without realizing DSCR exists. If you're buying a rental or already own multiple properties, DSCR changes the game by ignoring your tax returns entirely.
Conventional loans offer the lowest rates and most flexible terms when you're buying a primary residence. Lenders approve you based on income, assets, and credit—standard underwriting that works well if you're a W-2 employee or have clean tax returns.
Down payments start at 3% for first-time buyers and 5% for repeat buyers on primary homes. Investment properties require 15-25% down depending on how many properties you already own. Marin County prices mean that's real money—plan for $150K+ down on most Mill Valley rentals.
DSCR loans approve you based on whether the property's rent covers the mortgage payment. Lenders don't request tax returns, W-2s, or employment verification—they calculate a debt service coverage ratio using market rent and the proposed payment.
You need a DSCR above 1.0 for best pricing, meaning rent exceeds the full payment including taxes and insurance. Mill Valley rents run high enough that most single-family homes and duplexes qualify easily. Expect 20-25% down and rates 1-2% above conventional.
The approval process splits these loans completely. Conventional lenders pull tax returns and calculate debt-to-income ratios—if you write off too much or carry debt, you hit walls. DSCR lenders pull an appraisal with rent schedule and ignore your personal finances.
Rates reflect the risk difference. Conventional loans price 0.5-1% lower because Fannie and Freddie back them with strict underwriting. DSCR loans sit on portfolio lender balance sheets with higher risk, so you pay more. That rate gap costs $200-400 monthly on a $1M Mill Valley property.
Property limits matter for serious investors. Conventional financing caps at 10 financed properties—once you hit that, you're done unless you pay cash. DSCR has no such limit. If you own 15 rentals and want number 16, DSCR is your only leveraged option.
Choose conventional if you're buying a primary residence or you're a newer investor with straightforward W-2 income. The rate savings compound over 30 years—on a $1M loan, that's $150K+ in interest over the life of the loan. Don't pay DSCR premiums when you qualify for conventional.
Go DSCR when your tax returns don't support another mortgage, you've maxed out at 10 financed properties, or you want speed. Self-employed buyers who write off aggressive deductions get declined for conventional but sail through DSCR. Same for investors adding their 11th, 15th, or 20th property.
Mill Valley's rental yields matter here too. Single-family homes often rent for $5K-8K monthly, which easily covers DSCR requirements on properties up to $1.5M. Run the numbers—if rent hits 1% of purchase price, DSCR works. Below that, you'll need a larger down payment or choose conventional.
No. DSCR loans require the property generate rental income—they're investment-only. Part-time use doesn't qualify; you need a conventional or second-home loan instead.
Conventional loans start at 620 but best rates require 740+. DSCR lenders want 680 minimum, with pricing breaks at 700 and 740.
Yes, as long as rent covers the payment including HOA dues. Lenders add HOA fees to the debt service calculation, which can squeeze your DSCR on high-fee buildings.
Conventional typically closes in 21-30 days. DSCR can close in 15-21 days since there's no employment or income verification to slow things down.
Absolutely. Many investors start with DSCR for speed, then refinance to conventional once their tax returns support the loan. Just factor in closing costs for the refi.