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in Petaluma, CA
Petaluma's rental market draws both first-time landlords and seasoned investors. Conventional loans work great if you have W-2 income and clean tax returns, but DSCR loans ignore your personal finances entirely.
The right choice depends on whether you're buying a primary residence that might become a rental, or you're already managing multiple properties. Each loan uses completely different qualification rules.
Conventional loans require 620+ credit and verifiable income through W-2s or tax returns. You'll typically need 15-25% down for investment properties, and lenders cap your debt-to-income ratio at 43-50%.
These loans offer the lowest rates available and work well for owner-occupied purchases or your first rental. But every dollar of rental income gets discounted heavily in underwriting, making it tough to qualify for multiple properties.
DSCR loans skip tax returns and pay stubs completely. Underwriters only care if the property's rent covers the mortgage payment by 1.0-1.25x, making them perfect for self-employed borrowers or investors with multiple properties.
Expect 20-25% down and rates 0.5-1.5% higher than conventional. You can close under an LLC, and there's no limit on how many DSCR loans you carry simultaneously.
Conventional loans examine your entire financial picture—credit, income, debts, assets. DSCR loans look at one number: monthly rent divided by monthly payment including taxes and insurance.
Rate difference runs 0.5-1.5% higher on DSCR, but that gap shrinks if you're self-employed with complex tax returns. Conventional caps most investors at 10 financed properties; DSCR has no property limit.
Choose conventional if you have steady W-2 income and this is your first investment property. The rate savings over 30 years significantly outweigh the tougher qualification process.
Go DSCR if you're self-employed, own multiple rentals already, or the property's rent easily covers the payment. Also your only option if you've maxed out conventional financing at 10 properties.
Yes, if the property is vacant or you're buying to renovate. Most lenders require a third-party rent appraisal showing market rents for comparable Petaluma properties.
Conventional wins at 15% down for investment properties. DSCR typically requires 20-25% minimum, though some lenders offer 15% for strong rental ratios.
No, because they don't appear on your DTI calculation. Your personal mortgage approval isn't affected by DSCR loans since they're qualified on property income.
You'd refinance into a DSCR loan, not switch. Makes sense if you've acquired more properties and hit conventional lending limits.
DSCR typically closes in 21-30 days versus 30-45 for conventional. Less documentation means faster underwriting, helpful in competitive Petaluma markets.