Loading
in Monterey, CA
Monterey attracts both primary home buyers and rental investors. These two groups need completely different loans.
Conventional loans are built for buyers with W-2 income. DSCR loans are built for investors who want the property to qualify itself.
Conventional loans follow Fannie Mae and Freddie Mac guidelines. That means predictable requirements and competitive rates for qualified borrowers.
You need at least a 620 credit score and verifiable income. Most buyers put down 5-20%, though 20% avoids private mortgage insurance.
DSCR loans qualify you based on rental income, not your tax returns. Lenders look at whether the property's rent covers the mortgage payment.
A DSCR of 1.0 means rent equals the payment. Most lenders want 1.1 or higher. This is a non-QM loan — expect slightly higher rates.
The biggest split is how you qualify. Conventional underwriting digs into your pay stubs, tax returns, and debt-to-income ratio. DSCR skips all of that.
HousingWire flagged the 30-year fixed hitting 6.57% recently — rates vary by borrower profile and market conditions. DSCR rates typically run higher than conventional. That spread matters when you're underwriting rental cash flow in Monterey.
Buying a primary residence or second home with steady employment? Conventional is the right call. You'll get better rates and lower down payment options.
Buying a rental property in Monterey and want to keep your personal finances out of it? DSCR is made for that. Especially useful if you're self-employed or already maxed on conventional loan counts.
Some lenders allow it using projected or actual Airbnb income. Not every DSCR lender accepts short-term rental data, so lender selection matters.
Most DSCR lenders require 20-25% down. That's higher than conventional minimums but standard for investment property financing.
Most DSCR lenders want at least a 680 credit score. Some go down to 660, but rates get worse as the score drops.
No. DSCR loans are for investment properties only. Owner-occupied purchases require conventional, FHA, or another QM loan type.
DSCR loans often close faster because there's no income verification. No tax returns means fewer documents holding up underwriting.
No. Conventional loans require individual borrowers. DSCR loans can close in an LLC, which is a major advantage for portfolio investors.