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in Lodi, CA
Conventional loans work for Lodi homebuyers who plan to live in the property. DSCR loans target investors who want rental income to qualify them instead of W-2 paystubs.
The programs have completely different underwriting standards. One verifies your job and income. The other ignores both and only cares if the rent covers the mortgage.
Conventional loans require proof of income, employment verification, and at least 620 credit. You need tax returns, paystubs, and W-2s to show you can afford the payment.
Rates are typically lower than DSCR because Fannie Mae and Freddie Mac back these loans. Down payments start at 3% for owner-occupied homes, though you'll pay PMI below 20% down.
Debt-to-income ratio matters heavily here. Lenders cap your total monthly debts at 43-50% of gross income, depending on credit strength and reserves.
DSCR loans skip income verification completely. Underwriters analyze whether the rental income covers the mortgage payment, taxes, insurance, and HOA fees.
You need a DSCR of at least 1.0, meaning rent equals expenses. Most lenders prefer 1.25 or higher. If Lodi rent is $2,500 and total housing costs are $2,000, your DSCR is 1.25.
Rates run 0.5-1.5% higher than conventional because these are non-QM loans with more lender risk. Minimum down payment is 20-25%, and you won't get PMI as an option.
Conventional loans require full income documentation and limit how much debt you can carry. DSCR loans don't care about your job or personal debts—they only underwrite the property's rental income.
Rates favor conventional by a significant margin. DSCR loans cost more because they're portfolio products without Fannie or Freddie backing. You're paying for the flexibility of no income verification.
Property type differs too. Conventional allows owner-occupied homes with lower down payments. DSCR requires investment properties only and demands at least 20% down from day one.
Choose conventional if you're buying a Lodi home to live in or have clean W-2 income. You'll get better rates and lower down payment requirements. This program doesn't work for pure investment properties.
Pick DSCR if you're buying rental property and don't want to document personal income. Self-employed borrowers with complex tax returns often prefer this route because the property underwrites itself.
DSCR also fits investors who already own multiple rentals and can't qualify conventionally due to DTI limits. The higher rate is the price you pay for underwriting flexibility.
No. DSCR loans only work for investment properties. If you plan to live in the home, you need a conventional, FHA, or other owner-occupied loan program.
Conventional loans require 620 minimum. DSCR lenders typically want 660-680 for investment properties, though some accept 640 with larger down payments.
They divide monthly rent by the mortgage payment plus taxes, insurance, and HOA fees. A $2,500 rent with $2,000 total housing expense gives you a 1.25 DSCR.
DSCR loans often close quicker because there's no employment verification or income documentation. You skip weeks of back-and-forth gathering paystubs and tax returns.
Yes, if you convert your Lodi primary residence to a rental. Once it's investment property, you can refinance into a DSCR loan to eliminate income verification requirements.