Question 1

Can I use DSCR for a property in San Luis Obispo I plan to live in?

Accepted Answer

No. DSCR loans require the property to generate rental income. If you're occupying it, you need a conventional or FHA loan instead.

Question 2

What credit score do I need for each loan type?

Accepted Answer

Conventional loans typically require 620-640 minimum. DSCR loans start at 660, though some lenders go as low as 640 for strong cash flow properties.

Question 3

How does the property's rental income affect DSCR approval?

Accepted Answer

The monthly rent must cover at least 75% of the total mortgage payment. Higher coverage ratios improve your rate and approval odds.

Question 4

Can I refinance a conventional loan into a DSCR loan?

Accepted Answer

Yes. Many investors refinance conventional loans into DSCR once they convert a primary residence to a rental or want to free up DTI for more purchases.

Question 5

Do DSCR loans cost more over the life of the loan?

Accepted Answer

Yes, due to higher rates. But investors often prioritize cash flow and portfolio growth over total interest paid, especially when rental income covers the payment.

Conventional vs DSCR Loans in San Luis Obispo: Which Fits Your Investment Strategy?