Loading
in Rocklin, CA
Rocklin investors face a clear choice: conventional loans that scrutinize your W-2 income or DSCR loans that only care if the rent covers the mortgage. Most buyers default to conventional because it's familiar, but that's often the wrong move for rental properties.
Conventional loans work great for owner-occupied purchases or first investment properties. DSCR loans make sense when you own multiple rentals, work for yourself, or want to scale faster without hitting DTI walls.
Conventional loans are the standard mortgage most Rocklin buyers know. Lenders verify your employment, review tax returns, and calculate your debt-to-income ratio to determine approval. Rates are typically lower than non-QM options, and you can put down as little as 3% on a primary residence.
The catch: every mortgage you add increases your DTI, making it harder to qualify for the next one. You'll also need documented income that shows on tax returns. Self-employed borrowers often struggle because they write off too much income, even if cash flow is strong.
DSCR loans ignore your tax returns completely. The lender calculates whether the property's rent covers the mortgage payment, taxes, insurance, and HOA fees. If the ratio hits 1.0 or higher, you're approved regardless of your personal income or existing mortgage count.
Expect higher rates than conventional, typically 1-2% more. Most lenders require 20-25% down, and you can't use the property as your primary residence. But you can close multiple deals per year without DTI becoming a bottleneck, which matters for serious investors.
The income requirement splits these loans completely. Conventional lenders add up all your debts and compare them to your gross income from your job. DSCR lenders run one calculation: monthly rent divided by PITIA payment. Nothing else matters.
Conventional wins on rate and down payment flexibility. You'll pay less per month and need less cash to close. DSCR wins on scalability and simplicity. No employment letters, no tax transcripts, no explaining rental losses to an underwriter who doesn't understand real estate accounting.
Use conventional for your first rental property or if you're buying a primary residence in Rocklin. The rate savings compound over 30 years, and DTI isn't a problem yet. Also use it if you're W-2 employed with clean tax returns showing strong income.
Switch to DSCR once you own 2-3 rentals and conventional lenders start declining you for DTI. It's also the right call if you're self-employed with significant write-offs, own multiple LLCs, or want to close deals faster without chasing pay stubs and tax transcripts every time.
No. DSCR loans are strictly for investment properties. You must use conventional, FHA, or another owner-occupied program for a primary residence.
Most require at least 1.0, meaning rent equals the full payment. Some lenders go down to 0.75 with higher rates and more down payment.
Yes. The mortgage appears on your credit report like any other loan, even though it didn't require income verification to get approved.
Absolutely. Investors often refi to DSCR when their DTI is maxed out but the property cash flows well enough to qualify on rental income alone.
They use an appraisal with a rent schedule or a current lease agreement. Some accept market rent estimates from the appraiser for vacant properties.