Loading
in San Rafael, CA
San Rafael's rental market attracts both primary homebuyers and real estate investors. The loan you need depends entirely on whether you're moving in or collecting rent.
Conventional loans dominate owner-occupied purchases with lower rates and stricter income verification. DSCR loans skip your W-2s entirely and approve based on rental cash flow alone.
Conventional loans give owner-occupants the best rates and terms available. You'll need documented income, solid credit, and competitive debt ratios to qualify.
Most San Rafael buyers use conventional financing for primary residences. Lenders verify your W-2s, tax returns, and employment stability before approval.
Down payment starts at 3% for first-time buyers, 5% for repeat buyers. You'll pay PMI below 20% down, but rates stay competitive throughout the loan spectrum.
DSCR loans exist for one purpose: investment property financing without personal income verification. If the property generates enough rent to cover the mortgage, you qualify.
This is Non-QM lending designed for real estate investors. Self-employed borrowers and portfolio holders use DSCR when traditional income documentation doesn't reflect their buying power.
Lenders calculate the debt service coverage ratio by dividing monthly rent by the proposed mortgage payment. Most require a ratio above 1.0, meaning rent exceeds the payment.
Conventional loans require two years of tax returns, pay stubs, and employment verification. DSCR loans skip all of that and pull a rental appraisal instead.
Rates diverge significantly between these products. Conventional offers sub-7% rates for strong borrowers. DSCR typically runs 1-2% higher due to investor risk and Non-QM structure.
Down payment minimums tell the story clearly: 3-5% conventional for primary homes, 20-25% DSCR for investment properties. Portfolio lenders want meaningful equity from day one.
Buy conventional if you're occupying the property as your primary residence. You'll access better rates, lower down payments, and standard mortgage terms that save thousands over the loan life.
Choose DSCR if you're buying a San Rafael rental property and want income-based qualification. Self-employed investors especially benefit when tax write-offs reduce reported income below conventional guidelines.
Some borrowers qualify for both but choose DSCR strategically. If you want to preserve conventional financing capacity for a future primary home, using DSCR for investment purchases keeps that option open.
No, DSCR loans are for investment properties only. Primary residences require conventional, FHA, or other owner-occupied financing.
Most lenders require 1.0 or higher, meaning rent covers the full mortgage payment. Some allow 0.75 with compensating factors like higher down payments.
Many DSCR loans include prepayment penalties for 1-3 years. Conventional loans rarely have prepayment penalties, giving you more flexibility.
DSCR can close faster since there's no income verification. You skip the employment calls and tax return reviews that slow conventional approvals.
You'd refinance into a conventional loan if the property becomes your primary residence. The loans themselves don't convert, but refinancing is always an option.