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in Ripon, CA
Ripon investors have two distinct paths to finance property. Conventional loans evaluate you as a borrower — your income, credit, and debt ratios matter most.
DSCR loans ignore your W-2 entirely. They qualify you based on whether the rental property generates enough income to cover the mortgage payment.
The choice depends on whether you're buying your primary home or building a rental portfolio. Most owner-occupants use conventional financing, while serious investors lean toward DSCR loans for scale.
Conventional loans are the default option for most Ripon homebuyers. You need documented income, a 620+ credit score, and a debt-to-income ratio below 50%.
Down payments start at 3% for owner-occupants and 15% for investment properties. You'll get the best rates in the market if your credit sits above 740.
These loans max out at conforming limits — $806,500 in San Joaquin County for single-family homes. Above that, you need a jumbo loan with stricter requirements.
DSCR loans don't care about your tax returns or pay stubs. Lenders calculate the property's monthly rent and divide it by the mortgage payment to get a ratio.
A DSCR of 1.0 means rent exactly covers the payment. Most lenders want 1.25 or higher, meaning rent exceeds the payment by 25%.
You need 20-25% down and a 660+ credit score. Rates run 0.5-1.5% higher than conventional, but you can finance unlimited properties without hitting DTI walls.
Conventional loans use your personal finances to determine approval. DSCR loans use the property's rental income. That's the core split.
Rates vary by borrower profile and market conditions. Conventional loans typically offer rates 0.5-1.5% lower than DSCR loans because they carry less lender risk.
Conventional loans cap how many properties you can finance — most lenders stop at 10 financed properties. DSCR loans have no such limit, making them essential for scaling a rental portfolio.
Down payments differ too. Conventional loans allow 3% down for owner-occupants. DSCR loans require 20-25% regardless of property type.
Use conventional financing if you're buying a primary residence in Ripon or your first 1-2 rental properties. The lower rates save thousands over the loan term.
Switch to DSCR loans when your rental portfolio grows or your personal income is maxed out. Once you hit 4-5 financed properties, most conventional lenders tighten requirements significantly.
DSCR loans also work for self-employed investors who show minimal taxable income. If your tax strategy involves write-offs that crush your DTI, DSCR loans sidestep that problem entirely.
The break-even point is usually 3-4 rental properties. Below that, conventional loans cost less. Above that, DSCR loans let you keep buying without income verification roadblocks.
Yes, but you'll pay higher rates than conventional. Most first-time landlords save money using conventional financing unless DTI is already maxed out.
No. Lenders only care about the property's rental income divided by the mortgage payment, not your landlord track record.
Conventional loans start at 620, but best rates require 740+. DSCR loans typically need 660 minimum, with better pricing above 700.
Yes. Many investors refinance to DSCR loans to pull cash out or free up DTI for additional purchases.
DSCR loans often close quicker because they skip income documentation. No tax returns or employment verification means fewer underwriting delays.