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in Sebastopol, CA
Sebastopol investors face a choice between traditional conventional loans and DSCR financing. Conventional loans use your W-2 income to qualify. DSCR loans use the property's rental income instead.
This matters in Sonoma County where wine country properties often rent well but don't fit standard employment boxes. Your loan choice depends on whether you're showing tax returns or rental projections.
Conventional loans offer the lowest rates for borrowers with clean W-2 income and strong credit. You'll typically need 620+ credit, proof of employment, and tax returns showing stable income.
These work great for primary homes or investment properties when you report high income on your taxes. Down payments start at 3% for owner-occupied and 15% for investment properties in Sebastopol.
DSCR loans skip your tax returns entirely. Lenders qualify you based on the property's rental income divided by the mortgage payment. A DSCR of 1.0 means rent covers the mortgage exactly.
Most lenders want 1.0 to 1.25 DSCR depending on credit and down payment. You'll need 20-25% down and 660+ credit. No employment verification, no tax returns, no explanation of business write-offs.
Conventional loans beat DSCR on rate by 0.5-1.5% typically. But DSCR loans ignore your personal income completely. If you write off everything or run multiple businesses, that rate premium buys you qualification freedom.
Down payment differs too. Conventional allows 15% down on investment properties. DSCR starts at 20% and often requires 25% for better pricing. The closing timeline is similar, but DSCR underwriting moves faster without employment verification.
Choose conventional if you report strong W-2 income and want the lowest rate. This works for primary homes or rentals when your tax returns show enough qualifying income without hurting your tax strategy.
Pick DSCR when the property rents well but your tax returns don't show it. Self-employed investors with legitimate write-offs, multiple properties, or complex income prefer DSCR. You pay a rate premium for documentation simplicity.
No. DSCR loans only work for investment properties with rental income. Primary homes need conventional, FHA, or other owner-occupied financing.
Conventional allows 620 credit for investment properties. DSCR typically requires 660+ minimum, with better pricing at 700+.
Monthly rent divided by monthly mortgage payment including taxes and insurance. 1.0 means rent equals payment, 1.25 means rent is 25% higher.
DSCR often closes quicker because there's no employment verification. Both typically close in 21-30 days with responsive borrowers.
Yes. Investors often start with conventional for lower rates, then refinance to DSCR when adding properties makes tax returns messy.