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in Novato, CA
Novato investors face a clear choice between conventional financing and DSCR loans. Your employment type and property strategy determine which path makes sense.
Conventional loans reward W-2 income and strong credit with lower rates. DSCR loans ignore your tax returns entirely and approve based solely on rental income.
Conventional loans require full income documentation and a debt-to-income ratio under 50%. You'll need pay stubs, W-2s, and tax returns showing enough income to cover all debts plus the new mortgage.
Rates start around 6-7% with 620+ credit and 15% down for investment properties. Lower rates apply if you have 740+ credit and put 25% down. Conforming loan limits in Marin County reach $1,149,825 for 2024.
These loans work best for salaried buyers who show consistent income on paper. Self-employed borrowers who write off heavy expenses often can't qualify even with strong cash flow.
DSCR loans skip personal income entirely. Lenders calculate the property's monthly rent divided by the mortgage payment (PITI). You need a ratio of 1.0 or higher to qualify.
Expect rates 1-2% higher than conventional, typically 7.5-9%. Minimum down payment is 20% for investment properties. No loan limits apply—we've closed DSCR loans above $3 million in Marin.
Credit score matters less here. Many lenders approve 660+ scores, and some go to 620. The property's rental income drives approval, not your 1040.
The rate spread matters less than qualification. Conventional loans deny self-employed buyers who write off $80k in expenses but earn $200k gross. DSCR loans approve those same borrowers instantly if the rent covers the payment.
Portfolio size also differs. Conventional financing caps at 10 financed properties. DSCR lenders don't count existing mortgages—we've closed loans for investors with 30+ properties.
Novato's rental market supports both options. Single-family homes here rent for $4,000-$6,500 monthly. That income easily covers DSCR requirements on properties under $1.2 million.
Choose conventional if you're W-2 employed with clean tax returns and under 10 financed properties. The rate savings add up—0.5% less on a $900k loan saves $4,500 yearly.
Pick DSCR if you're self-employed, have multiple rental properties, or show low taxable income. The higher rate is the cost of ignoring your 1040. For Novato investors scaling portfolios past 10 properties, DSCR is often the only option.
Yes, but you need 20% down and the rental income must cover the full mortgage payment. No prior landlord experience required.
Most Novato single-family rentals achieve 1.0-1.2 DSCR at current rates. Higher ratios unlock better pricing tiers from lenders.
Yes, most DSCR lenders allow cash-out up to 75% LTV. The property must still meet the minimum 1.0 DSCR after refinancing.
DSCR loans often close 5-7 days faster since there's no employment verification or tax return review. Expect 18-21 days vs 25-30 for conventional.
Yes, but you'll restart underwriting and likely pay a new appraisal fee. Switch early if income documentation becomes an issue.