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in Vallejo, CA
Vallejo investors face a choice: conventional loans built for owner-occupants or DSCR loans designed for rental cash flow. Most buyers default to conventional because it's familiar, but that's not always the right move.
Conventional loans demand W-2 income verification and debt-to-income ratios. DSCR loans ignore your tax returns entirely—they care about one thing: does the property's rent cover the mortgage?
Conventional loans are the workhorse of residential lending. Lenders verify your income, check your debt ratios, and offer rates as low as any program on the market.
You'll need decent credit—620 minimum, 740+ for best pricing. Down payments start at 3% for primary homes, 15% for investment properties. Most borrowers can finance up to 10 properties this way before hitting Fannie Mae's limits.
DSCR loans flip the underwriting model. Instead of pulling your tax returns, lenders order a rent schedule or lease agreement. They divide projected rent by the mortgage payment to calculate your debt service coverage ratio.
A ratio above 1.0 means rent covers the payment—you're approved. Below 1.0 still works with higher down payments, often 25-30%. Self-employed investors with complex returns love this route because personal income never enters the conversation.
Rate spread matters here. Conventional loans for investment properties run 0.5-1% higher than owner-occupied rates. DSCR loans add another 1-2% on top of that—call it 2-3% total above best-execution conventional pricing.
Documentation tells the real story. Conventional underwriters want two years of W-2s, recent pay stubs, and full tax returns. DSCR lenders skip all that. They pull credit, order an appraisal, and verify the rent covers debt service. Done.
Go conventional if you've got clean W-2 income and low debt ratios. The rate advantage pays for itself over 30 years, especially on Vallejo properties where cash flow already runs thin compared to inland markets.
Choose DSCR when personal income complicates things—write-offs that tank your qualifying income, multiple LLCs, or you're maxed on conventional investor loans. You'll pay more upfront and monthly, but approval odds jump when the property's numbers work.
Yes, DSCR loans don't require prior landlord experience. Lenders qualify the property's rent against the payment, not your history as an investor.
DSCR typically closes 5-7 days faster because there's no income verification. Conventional loans need full employment and tax return reviews.
Yes, both allow cash-out refi. Conventional caps at 75% LTV for investment properties, DSCR often matches that or requires slightly more equity.
Conventional works for 2-4 units if you occupy one side. DSCR handles full investment properties including duplexes with no occupancy requirement.
Conventional starts at 620 for investors. DSCR lenders typically want 680 minimum, with best pricing at 720+.