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in Los Banos, CA
Los Banos real estate attracts both primary homebuyers and rental investors. The loan you choose determines your approval path and what documentation lenders actually review.
Conventional loans verify your W-2 income and credit history. DSCR loans skip your tax returns entirely and qualify you based on rental income the property generates.
Conventional loans follow Fannie Mae and Freddie Mac guidelines. You need 620+ credit for investment properties and 15-25% down depending on property use.
Lenders verify two years of income through W-2s and tax returns. Your debt-to-income ratio can't exceed 45-50% in most cases, including the new mortgage payment.
These loans offer the lowest rates when you qualify. You can buy primary residences, second homes, or investment properties with the same basic structure.
DSCR loans qualify rental investors without reviewing personal income. Lenders calculate debt service coverage ratio by dividing monthly rent by the mortgage payment.
You need 20-25% down and 660+ credit typically. No W-2s, no tax returns, no employment letters required during underwriting.
The property must generate enough rent to cover the mortgage. Most lenders want a DSCR of 1.0 or higher, meaning rent equals or exceeds the payment.
Documentation splits these loans completely. Conventional requires full tax returns and W-2s. DSCR uses a rent appraisal or lease agreement instead.
Rates differ by about 0.5-1.5% typically. Conventional loans cost less for qualified borrowers. DSCR rates run higher because lenders take on more risk without income verification.
Loan limits matter more with conventional financing. Fannie and Freddie cap conforming loans, pushing larger purchases into jumbo territory. DSCR lenders set their own limits based on property performance.
Choose conventional if you're a W-2 earner with strong tax returns. You'll get better rates and more lender options for Los Banos properties.
Pick DSCR if you're self-employed with complex returns or buying multiple rentals. You trade slightly higher rates for simpler qualification based purely on rental income.
Most primary residence buyers use conventional loans. Investors with 1-2 properties often start conventional, then switch to DSCR as their portfolio grows and income documentation gets messy.
No. DSCR loans only work for investment properties that generate rental income. Primary residences require conventional, FHA, or VA financing.
DSCR loans often close quicker because underwriters skip income verification. Conventional takes longer when tax returns show complicated business structures.
Yes. Conventional goes up to 4 units. DSCR lenders typically finance 1-4 unit properties, with some extending to small apartment buildings.
Conventional investment properties need 620 minimum. DSCR lenders usually require 660+, though some programs start at 640 with larger down payments.
Yes. Investors often refinance to DSCR when their portfolio grows and income verification becomes cumbersome across multiple properties.