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in Grass Valley, CA
Grass Valley investors face a clear choice: conventional loans based on personal income or DSCR loans that qualify on property cash flow. The right answer depends entirely on your borrower profile and the property's rental numbers.
Most owner-occupants default to conventional financing for good reason. Investment property buyers often hit income limits with conventional loans, which is exactly when DSCR makes sense.
Conventional loans are the standard for most Grass Valley buyers. You need documented income, a 620+ credit score, and typically 3-5% down for primary homes or 15-25% for investment properties.
Rates are lower than DSCR because lenders view personal income verification as lower risk. Investment properties require 15% down minimum, and your debt-to-income ratio can't exceed 50% in most cases.
These loans work great when your tax returns show strong W-2 income. Self-employed buyers who write off expenses often struggle to qualify despite having actual cash flow.
DSCR loans ignore your personal income completely. Underwriters look at one number: does the property's rent cover the mortgage payment plus taxes and insurance?
You need 20-25% down and a 680+ credit score typically. Rates run 0.75-1.5% higher than conventional, but that premium buys you approval based solely on property performance.
These loans are purpose-built for investors who own multiple properties or self-employed borrowers whose tax returns don't reflect actual income. No tax returns, no pay stubs, no employment verification.
Income verification is the core difference. Conventional loans require two years of tax returns, pay stubs, and W-2s. DSCR loans require a lease agreement and an appraisal showing market rent.
Down payment and rates also split clearly. Conventional investment loans start at 15% down with rates near primary residence levels. DSCR loans need 20-25% down and rates typically run a point higher.
Loan limits matter in Grass Valley's market. Conventional loans cap at $766,550 for conforming rates. DSCR lenders often go to $2-3 million without hitting portfolio loan pricing.
Choose conventional if you're a W-2 employee buying your first or second investment property. The rate savings compound significantly over 30 years when you have straightforward income to document.
Choose DSCR when your tax returns are a mess, you own multiple properties, or the property rent clearly covers the payment but your DTI is maxed. Self-employed borrowers with legitimate write-offs almost always benefit from DSCR.
Run the numbers both ways. Sometimes paying an extra point on rate is cheaper than restructuring your business income just to satisfy conventional underwriting.
No, DSCR loans only work for investment properties. If you're buying a home to live in, conventional or FHA loans are your options.
Most lenders want a ratio of 1.0 or higher, meaning rent covers the full payment. Some accept 0.75 with compensating factors like larger down payments.
Yes, typically 6-12 months of reserves per property. Conventional investment loans usually require 6 months for single properties.
Absolutely. Many investors refinance to DSCR when acquiring more properties to free up DTI capacity for the next deal.
DSCR often closes quicker because there's no employment verification. Conventional loans take 30-45 days; DSCR can close in 21-30 days.