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in Sonoma, CA
Sonoma's wine country real estate attracts both primary buyers and investors. The loan you choose depends on whether you're buying a home to live in or a rental property.
Conventional loans work for owner-occupants and second homes. DSCR loans qualify you based on rental income, not your W-2. Most Sonoma investors need to understand both.
Conventional loans follow Fannie Mae and Freddie Mac guidelines. You need documented income, credit above 620, and a debt-to-income ratio under 50%.
Rates are competitive because these loans carry less lender risk. You can put down as little as 3% on a primary residence, though 20% avoids mortgage insurance.
Conventional loans work for primary homes, second homes, and investment properties. But qualifying gets harder with each additional property you finance.
DSCR loans qualify you based on rental income alone. Lenders calculate the property's monthly rent divided by the monthly mortgage payment.
You need a DSCR of at least 1.0, meaning rent covers the payment. Most lenders prefer 1.25. Your personal income doesn't matter.
These loans require 20-25% down and credit above 660. Rates run 0.5-1.5% higher than conventional because they're non-QM products.
Conventional loans verify your personal income through tax returns and pay stubs. DSCR loans don't care what you earn—they only look at the rental property's income.
Conventional rates are lower but qualification is stricter. DSCR rates cost more but work for self-employed borrowers or investors with complex tax returns.
Conventional loans let you buy owner-occupied properties with minimal down payments. DSCR loans require 20-25% down and only work for investment properties.
Choose conventional if you're buying a primary home or have clean W-2 income. You'll get better rates and more flexibility on down payments.
Choose DSCR if you're buying a rental property and don't want to verify income. This works well for self-employed buyers or investors with multiple properties.
Sonoma's vacation rental market makes DSCR loans popular. If the property generates enough rent to cover the mortgage, you qualify—even with no tax returns.
No. DSCR loans only work for investment properties that generate rental income. Second homes require conventional or jumbo financing.
Conventional loans always have lower rates. DSCR rates run 0.5-1.5% higher because they're non-QM products with more lender risk.
Yes. Most lenders require 6-12 months of reserves in addition to your down payment. Conventional loans need less.
You'd need to refinance. But most investors keep conventional loans for better rates unless they need DSCR flexibility.
DSCR loans work well if rental income is strong. You qualify on cash flow, not personal income, which helps with short-term rental properties.