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in Palo Alto, CA
Palo Alto attracts two very different borrowers. Owner-occupants want conventional loans. Investors buying rentals want DSCR.
These loans qualify you differently. Conventional looks at your income. DSCR looks at the property's rent. That distinction matters a lot here.
Conventional loans are the standard for primary home buyers. Lenders check your W-2s, tax returns, and debt-to-income ratio.
Rates are competitive for strong borrowers. You'll need at least 620 credit, but scores above 740 get the best pricing. Rates vary by borrower profile and market conditions.
DSCR loans skip your personal income entirely. Lenders divide the property's gross rent by its monthly debt payment. Hit a 1.0 ratio or better and you're in.
This is a non-QM loan — it doesn't follow standard agency rules. Palo Alto rental yields can be thin, so your DSCR calculation needs careful attention before you apply.
HousingWire flagged the 30-year fixed hitting 6.57% with applications dropping sharply — that rate environment hits conventional buyers hardest on affordability.
DSCR loans carry higher rates than conventional. But they open doors for self-employed investors and LLCs that can't show clean personal income. Different tools for different goals.
Buying your home or a second property? Conventional wins on rate and terms. If you qualify on income, there's no reason to use DSCR.
Buying a Palo Alto rental under an LLC, or your tax returns don't reflect your real income? DSCR is built for that. It's not a workaround — it's the right tool.
No. DSCR loans are for investment properties only. For a primary home, you need a conventional or government-backed loan.
Conventional lenders typically require 620 minimum. DSCR lenders usually want 620-680, but requirements vary by lender.
No personal income docs are required. Lenders only verify the rental property's income against its debt payments.
Conventional rates run lower than DSCR rates. Rates vary by borrower profile and market conditions.
Yes. Most DSCR lenders allow LLC vesting. Conventional loans generally require individual borrower ownership.
Palo Alto rents are strong but prices are high. Run the DSCR math carefully — we can pull comps before you apply.