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in Colfax, CA
Colfax sits in the Sierra foothills with a mix of primary residences and mountain rental properties. Conventional loans dominate for owner-occupants while DSCR loans serve investors who want approval based on rental income, not W-2 paystubs.
The choice hinges on one question: are you moving in or renting it out? Your occupancy plan determines which loan structure makes sense and what documentation you'll need to close.
Conventional loans use your personal income and credit to qualify. Lenders verify employment, review tax returns, and calculate debt-to-income ratios. Rates start around 6-7% depending on credit and down payment. Rates vary by borrower profile and market conditions.
You need a 620 credit score minimum, though 740+ unlocks the best pricing. Down payments run 3% for first-time buyers, 5% for repeat buyers, and 10% for second homes. PMI applies below 20% down but drops off once you hit that equity threshold.
DSCR loans ignore your personal income entirely. Underwriters analyze the rental property's cash flow using a debt service coverage ratio calculation. Monthly rent divided by monthly mortgage payment must exceed 1.0 for approval, though some lenders accept 0.75 with compensating factors.
You need 20-25% down and a 640 credit score minimum. No tax returns, no pay stubs, no employment verification. Expect rates 1-2% higher than conventional due to the non-QM structure. Investment properties only—no owner occupancy allowed.
Conventional loans cost less upfront and carry lower rates, but demand full income documentation and allow owner occupancy. DSCR loans cost more but skip the tax return drill and work for self-employed investors with complicated income pictures.
Conventional maxes out at 10 units with standard underwriting. DSCR handles single-family rentals up to small multifamily without batting an eye at your 1099 income structure. Placer County's rental market supports both approaches depending on your borrower profile.
Choose conventional if you're living in the property or have straightforward W-2 income. The rate savings add up over 30 years and documentation is manageable for traditional employees. Second homes in Colfax qualify under conventional guidelines with 10% down.
Pick DSCR if you're buying a rental and don't want to prove personal income. Self-employed buyers, retirees with asset income, and portfolio investors prefer the streamlined approval. The rate premium costs less than restructuring your tax returns to show higher income.
No. DSCR loans require investment property occupancy only. Second homes need conventional or bank statement loans instead.
DSCR typically closes in 21-30 days since there's no income verification. Conventional takes 30-45 days with full documentation review.
Yes. Conventional allows cash-out up to 80% LTV. DSCR permits cash-out to 75% LTV for investment properties.
You'd refinance into a new conventional loan once you meet occupancy and income requirements. They're separate transactions, not conversions.
DSCR handles short-term rental income if you provide a lease or rental history. Conventional treats it as a second home requiring personal income qualification.