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in Coronado, CA
Coronado's vacation rental market and high property values create two distinct buyer types. Owner-occupants typically use conventional loans while investors chase DSCR products.
The difference matters more here than most markets. Coronado homes often exceed conforming limits, and rental income can justify purchases that W-2 income cannot.
These loan types serve completely different purposes. One qualifies you based on your personal finances, the other on what the property earns.
Conventional loans require documented income, steady employment, and 620+ credit. You'll need 3-5% down for primary homes, 15-25% for investment properties.
Rates hit their lowest tiers at 740+ credit with 20% down. Lenders cap your debt-to-income ratio at 50%, meaning your monthly debts can't exceed half your gross income.
These loans work for buyers who can prove strong personal finances. If you're purchasing a Coronado primary residence with solid W-2 income, conventional offers the best rates.
DSCR loans ignore your tax returns entirely. Lenders divide monthly rent by monthly mortgage payment to get a ratio, requiring 1.0 or higher for most programs.
You'll need 20-25% down and 660+ credit. Rates run 1-2% higher than conventional, but approval depends only on the property's rental income.
These work for real estate investors, self-employed borrowers, or anyone whose tax returns don't reflect their buying power. Coronado vacation rentals often generate strong ratios.
Conventional loans scrutinize your entire financial life. DSCR loans look only at the property's rent versus its proposed payment.
Rate difference typically runs 1-2%. A conventional loan at 6.75% might price at 8% as DSCR, but that higher rate buys you approval without income documentation.
Down payment requirements separate slightly. Conventional allows 3% down on owner-occupied homes, while DSCR starts at 20% across the board.
Investment property treatment differs completely. Conventional requires 15% down and counts the full mortgage against your DTI. DSCR requires 20-25% down but doesn't care about your other debts.
Choose conventional if you're buying a primary residence or have clean W-2 income and low debt. The rate savings over 30 years are substantial.
Choose DSCR if you're building a rental portfolio, self-employed with write-offs, or buying a property that generates strong rental income. The higher rate is the cost of skipping income documentation.
Coronado properties often work well for DSCR because vacation rental income can exceed long-term rental comps. A $2M property renting for $8K monthly can qualify when your tax returns won't.
I run both options on most Coronado investment deals. Sometimes the rental income justifies a higher purchase price than conventional lending would allow.
No, DSCR loans are investment property only. Primary homes require conventional, FHA, VA, or jumbo financing depending on your situation.
Conventional becomes jumbo above $806,500, with stricter requirements. DSCR programs continue with the same structure regardless of loan amount.
DSCR can close in 10-15 days since there's no employment or income verification. Conventional typically takes 21-30 days with full documentation.
Yes, investors often refi to DSCR after converting a primary home to a rental. It removes the property from your debt-to-income ratio for future purchases.
Yes, lenders use market rent analysis or actual rental history. Coronado's strong vacation rental market often produces qualifying ratios even at premium prices.