Loading
in Colma, CA
Colma real estate investors and homebuyers face different financing needs. Conventional loans serve owner-occupants and some investors with strong personal income. DSCR loans focus solely on rental property cash flow, ignoring W-2 income entirely.
Your choice depends on whether you're buying a primary residence or an investment property in San Mateo County. Each loan type has distinct qualification standards, documentation requirements, and ideal use cases that shape your borrowing experience.
Conventional loans represent traditional mortgage financing through Fannie Mae and Freddie Mac guidelines. Lenders review your credit score, employment history, income documentation, and debt-to-income ratio. Rates vary by borrower profile and market conditions.
These mortgages work for primary residences, second homes, and investment properties in Colma. You'll typically need a 620+ credit score and can put down as little as 3% on owner-occupied homes. Investment properties require 15-25% down and stronger financial profiles.
Documentation includes tax returns, pay stubs, W-2s, and bank statements. Conventional loans offer the lowest rates for well-qualified borrowers and provide the most flexible property options throughout San Mateo County.
DSCR loans qualify investors based on rental property cash flow rather than personal income. Lenders calculate the debt service coverage ratio by dividing monthly rent by the mortgage payment. A ratio above 1.0 means the property generates enough income to cover the debt.
These investment-focused loans skip tax returns, pay stubs, and employment verification. Instead, underwriters analyze the Colma rental property itself through lease agreements or market rent appraisals. This makes them ideal for self-employed investors, retirees, or those with complex income.
DSCR loans typically require 20-25% down and accept lower credit scores than conventional options. Interest rates run higher due to the non-QM structure, but the streamlined approval process and income flexibility attract serious real estate investors.
Income verification separates these products dramatically. Conventional loans demand two years of tax returns, recent pay stubs, and employer verification. DSCR loans ignore your W-2 entirely, focusing instead on the rental income your Colma property generates.
Property type restrictions differ significantly. Conventional loans finance owner-occupied homes, second homes, and investment properties. DSCR loans exclusively serve rental properties and cannot fund primary residences in San Mateo County.
Rate structures and costs vary considerably. Conventional loans offer the lowest interest rates for strong borrowers but require mortgage insurance below 20% down. DSCR loans charge higher rates and avoid income documentation hassles, trading cost for convenience.
Choose conventional financing when buying a Colma home to live in or when you have steady W-2 income and strong credit. The lower rates and flexible down payment options make this the default choice for most owner-occupants and traditional borrowers.
Select DSCR loans when purchasing rental properties with strong cash flow potential. Self-employed investors, those with multiple properties, or borrowers who prefer privacy around personal finances benefit most from this structure.
Consider your documentation comfort level and property purpose. If you can easily verify income and want the best rate, conventional wins. If you value speed, privacy, and focus purely on investment returns from your Colma rental, DSCR makes more sense.
No, DSCR loans exclusively finance rental investment properties. You must use a conventional loan or other owner-occupied product for a Colma primary residence or second home.
DSCR loans require significantly less documentation since they skip tax returns and pay stubs. Conventional loans need full income verification, employment history, and detailed financial records.
Generally yes, because DSCR loans fall into the non-QM category with different risk profiles. Rates vary by borrower profile and market conditions, but expect higher costs than conventional financing.
Conventional loans limit you to 4-10 financed properties depending on the lender. DSCR loans often allow unlimited investment properties, making them better for portfolio growth.
DSCR loans typically close faster due to reduced documentation requirements. Without income verification delays, many DSCR transactions complete in 21-30 days versus 30-45 for conventional loans.