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in San Bruno, CA
San Bruno investors face a critical choice between conventional financing and DSCR loans. Each option serves different borrower needs and property types in San Mateo County's competitive real estate market.
Conventional loans rely on your personal income and credit history. DSCR loans qualify you based on the rental property's cash flow instead. Your choice depends on whether you're buying a primary residence or building an investment portfolio.
Conventional loans represent the traditional mortgage path backed by Fannie Mae or Freddie Mac. Lenders review your income, employment history, credit score, and debt-to-income ratio to determine eligibility.
These mortgages typically offer the lowest rates for well-qualified borrowers. You'll need a credit score of 620 or higher, though better rates require scores above 740. Down payments start at 3% for primary residences.
San Bruno homebuyers using conventional financing benefit from established underwriting standards. The process is straightforward if you have W-2 income, tax returns, and a solid credit profile.
DSCR loans qualify investors based on property performance, not personal income. Lenders calculate the Debt Service Coverage Ratio by dividing monthly rental income by monthly mortgage payment.
A DSCR of 1.0 means rent exactly covers the mortgage. Most lenders require 1.0 or higher, though some accept ratios down to 0.75 with compensating factors like larger down payments.
San Bruno investors benefit from streamlined documentation requirements. No tax returns, pay stubs, or employment verification needed. The property itself proves it can support the loan.
Conventional loans use your debt-to-income ratio, while DSCR loans use the property's debt service coverage ratio. This fundamental difference changes who qualifies and for what purposes.
Rates vary by borrower profile and market conditions, but DSCR loans typically carry slightly higher rates due to their non-QM status. Conventional loans reward strong credit with better pricing. DSCR loans offer more flexibility for self-employed investors or those with multiple properties.
Down payment requirements differ significantly. Conventional loans allow as little as 3% down on primary residences. DSCR loans typically require 20-25% down, reflecting their investment property focus.
Documentation requirements separate these options clearly. Conventional loans need extensive income verification. DSCR loans skip personal financials entirely, reviewing only the property's lease agreement and appraisal.
Choose conventional financing when buying your San Bruno primary residence or second home. These loans offer the best rates and lowest down payments for owner-occupied properties. You'll need verifiable income and good credit.
Select DSCR loans when building a San Mateo County rental portfolio. They work well for self-employed investors, those with complex tax returns, or buyers acquiring multiple properties simultaneously. The property's rental income qualifies you.
Consider your long-term strategy. Conventional loans limit investment property financing but excel for personal use. DSCR loans support unlimited rental properties but won't work for your primary home. Many successful investors use both loan types for different properties.
No. DSCR loans are exclusively for investment properties that generate rental income. You must use conventional financing for primary residences or second homes in San Bruno.
Rates vary by borrower profile and market conditions. Conventional loans typically offer lower rates for well-qualified borrowers. DSCR loans carry slightly higher rates due to their specialized nature.
Conventional loans require minimum 620 credit scores. DSCR loans often accept scores as low as 660-680. Neither requires perfect credit, though better scores improve your terms.
Conventional loans allow 3-5% down on primary residences, 15% on investment properties. DSCR loans typically require 20-25% down for all investment purchases.
Yes, but you'll need two years of tax returns and stable income documentation. DSCR loans skip personal income verification entirely, making them easier for self-employed investors.