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in Manteca, CA
Manteca investors face a choice: conventional financing with lower rates or DSCR loans that ignore your W-2 income. The right pick depends on whether you're buying a primary home or building a rental portfolio.
Conventional loans reward strong credit and steady income with rates in the 6-7% range. DSCR loans qualify you on rental cash flow alone, which works for self-employed buyers or those maxed out on DTI.
Conventional loans are your standard mortgage product. Lenders verify income, check credit, and calculate debt-to-income ratio to approve you. Most Manteca buyers use these for primary homes or second properties.
You need 620+ credit for approval, though 740+ gets you the best pricing. Down payments start at 3% for first-timers and 5% for repeat buyers. Expect full tax returns, pay stubs, and bank statements during underwriting.
DSCR loans qualify you on the property's rental income instead of your paycheck. Lenders calculate debt service coverage ratio by dividing projected rent by the monthly mortgage payment. A ratio above 1.0 means the rent covers the mortgage.
These loans require 20-25% down and credit scores above 680. You won't submit tax returns or employment letters. Lenders order a rent survey to determine market rent for the property you're buying.
Rate spread is the biggest cost difference. Conventional loans price around 6-6.5% right now. DSCR loans start at 7.5-8% because they carry more risk for lenders. That gap costs you roughly $150 monthly per $300,000 borrowed.
Income documentation separates these programs completely. Conventional underwriters want two years of tax returns and recent pay stubs. DSCR lenders skip all that and focus only on whether the rent covers the mortgage payment.
Pick conventional if you're buying a primary home or qualify easily with W-2 income. The rate savings compound over 30 years, and lower down payments preserve your cash for other investments.
Choose DSCR when you're self-employed, building a rental portfolio, or your DTI is too high for conventional approval. Manteca's rental market supports DSCR purchases on single-families in most neighborhoods. The higher rate is worth it if conventional won't approve you.
No. DSCR loans are investment property only. You must use conventional, FHA, or VA financing for homes you'll occupy as your primary residence.
Most lenders want 1.0 or higher, meaning rent equals or exceeds the mortgage payment. Some allow 0.75 with larger down payments and strong credit.
Yes, but you'll need to qualify using your personal income and DTI. Lenders count 75% of projected rent as income after you have a signed lease.
DSCR loans often close quicker because there's no employment or income verification. Conventional loans take longer due to document review and underwriting steps.
Yes. Many investors refinance to cash out equity or eliminate income verification requirements. You'll pay a higher rate but gain flexibility on future purchases.