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in Santa Rosa, CA
Santa Rosa's rental market draws both owner-occupants and investors, but they need different loan structures. Conventional loans work for buyers who can document W-2 income and plan to live in the property.
DSCR loans flip the script—they qualify you based on what the property earns, not your tax returns. That matters if you're building a rental portfolio or have income that doesn't show up cleanly on a 1040.
Conventional loans are the default for primary residences and offer the lowest rates when you have strong credit and stable W-2 income. You'll need 620+ credit, typically 5-20% down, and clean two-year employment history.
These loans come with strict debt-to-income limits—usually 43-50% max. Lenders verify every dollar you earn through pay stubs, tax returns, and bank statements.
The upside is lower rates and the option to put just 3-5% down with PMI. But if you're self-employed or have multiple rental properties muddying your tax picture, approval gets harder.
DSCR loans ignore your personal income entirely. Instead, lenders calculate the property's monthly rent divided by the mortgage payment—that's your debt service coverage ratio.
Most lenders want a DSCR of 1.0 or higher, meaning rent covers the full payment. You'll need 20-25% down, 660+ credit, and the property must appraise with rental income documented.
These loans cost more—rates run 0.5-1.5% higher than conventional. But they're the fastest path to finance investment properties without tanking your debt ratios or digging through tax transcripts.
The approval process splits at how lenders measure risk. Conventional loans bet on your ability to pay from employment income. DSCR loans bet on the property's ability to carry itself.
Down payments differ—conventional can go as low as 3% for owner-occupants, while DSCR starts at 20%. Rates follow the same pattern: conventional wins on pricing, DSCR wins on simplicity for investors.
Tax return requirements are where investors feel the biggest gap. Conventional lenders will pick apart your Schedule E and add back depreciation. DSCR lenders don't even ask for returns.
If you're buying in Santa Rosa to live there and have W-2 income, conventional loans will save you thousands in interest. The lower rates and smaller down payment requirements make them the obvious choice for primary residences.
If you're acquiring rental properties—especially if you already own several or take business deductions that crush your taxable income—DSCR loans remove the income documentation headache. You'll pay for that convenience with higher rates, but you'll actually get approved.
The gray area is house hacking or recent self-employment. Sometimes a conventional loan still works if your income is clean. We run both scenarios to see which path closes.
No. DSCR loans are for investment properties only. If you're buying a home to live in, you need a conventional, FHA, or other owner-occupant loan.
Most lenders want 1.0 or higher, meaning rent covers the full mortgage payment. Some allow 0.75 with larger down payments and higher rates.
Yes. The appraisal must include a rental income analysis showing what the property can generate in monthly rent. That number determines your DSCR.
Yes, if you put down 20% or more. Below that, you'll pay mortgage insurance until you hit 20% equity through payments or appreciation.
DSCR loans often close quicker because there's no income documentation. Conventional loans take longer when lenders need multiple years of tax returns and employment verification.