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in Lathrop, CA
Lathrop sits between Tracy and Stockton along I-5, drawing both commuters and real estate investors. Conventional loans work for owner-occupants who can document W-2 income. DSCR loans approve based on rental income alone.
The choice comes down to who's living there. If you're buying a primary residence, conventional is your path. If you're collecting rent and want zero personal income verification, DSCR makes sense.
Conventional loans give you the lowest rates and smallest down payments. You need 620+ credit and documented income from W-2s, tax returns, or verified business income. Put down 3% on a primary home or 15% on an investment property.
Lenders verify everything—employment history, debt-to-income ratio under 50%, and reserves. If you have stable W-2 income and want the best pricing, this is it. Rates vary by borrower profile and market conditions.
DSCR loans qualify you on the property's rental income, not yours. Lenders calculate the Debt Service Coverage Ratio: monthly rent divided by the mortgage payment. You need 1.0 or higher to qualify, though some lenders go to 0.75.
No tax returns, no pay stubs, no employment verification. You put down 20-25% and accept rates 1-2% higher than conventional. This works for self-employed investors who show low income on paper or anyone with multiple rentals.
Conventional verifies your income and caps debt-to-income at 50%. DSCR ignores your income entirely and looks only at what the property generates. Conventional starts at 3% down for owner-occupants. DSCR requires 20-25% regardless.
Rate spread is real—conventional runs 1-2% lower. But DSCR lets you skip the tax return hassle and doesn't count existing rental debt against you. If you own multiple properties, DSCR keeps approvals simple.
Use conventional if you're living in the property or can easily document income. The lower rate saves thousands over the loan term. Use DSCR if you're buying a rental, show low taxable income, or already own several investment properties.
Lathrop's rental market supports both strategies. Conventional works for house hackers buying duplexes. DSCR fits investors targeting single-family homes near the Amazon fulfillment center. Run the numbers on both before deciding.
No. DSCR only works for investment properties. If you're living there, you need a conventional or FHA loan with income verification.
Conventional starts at 620 credit. DSCR lenders typically want 680 minimum, though some go to 660 with higher rates.
They order an appraisal with a rent schedule. The appraiser estimates market rent, then divides by the proposed mortgage payment to get your DSCR.
Yes, if the property is now a rental. DSCR cash-out refinances pull equity without income verification once you have a tenant in place.
DSCR often closes quicker—no income verification means less documentation. Conventional takes longer with employment and asset checks but offers better rates.