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in Windsor, CA
Windsor's rental market attracts both owner-occupants and investors, but the loan that works for one rarely works for the other. Conventional loans serve primary buyers who live in the property. DSCR loans serve investors who buy for rental income.
The difference isn't just rates or down payments. It's how lenders measure your ability to repay. Conventional underwriters want to see your W-2 and tax returns. DSCR underwriters only care if the rent covers the mortgage.
Conventional loans are the standard choice for Windsor homebuyers who plan to live in the property. You'll need a 620 credit score minimum, though 740+ gets you the best rates. Down payments start at 3% for first-time buyers and 5% for repeat buyers.
Fannie Mae and Freddie Mac set the rules here. That means strict debt-to-income limits, full income documentation, and caps on how many financed properties you can own. Rates vary by borrower profile and market conditions, but conventional typically offers the lowest rates available.
DSCR loans ignore your tax returns entirely. Instead, lenders divide the property's rental income by its monthly debt obligations. If that ratio hits 1.0 or higher, the property qualifies itself. You could have zero W-2 income and still get approved.
Expect 20-25% down and rates 1-2% higher than conventional. The tradeoff is speed and simplicity for investors. No tax returns means no delays waiting for IRS transcripts. No DTI calculations means your other properties don't count against you.
Down payment separates these loans immediately. Conventional starts at 3% for primary residence buyers. DSCR requires 20-25% regardless of property type. That's $60,000 down on a $300,000 Windsor rental versus $9,000 on a conventional primary home.
Income verification is the bigger split. Conventional lenders want two years of tax returns, W-2s, and paystubs. DSCR lenders want a lease agreement and property appraisal. If you're self-employed with write-offs that tank your taxable income, DSCR often approves loans conventional lenders reject.
Choose conventional if you're buying a Windsor home to live in or if you're an investor with clean W-2 income. The lower rates and down payments beat DSCR every time when you qualify. Most first-time buyers and primary residence purchases go conventional.
Choose DSCR if you're acquiring a rental property and want to avoid income verification. This works for self-employed buyers, retirees living on assets, or investors who already own multiple financed properties. The rental income does the qualifying work.
No. DSCR loans require the property to be rented. They're investment-only financing that qualifies based on rental income, not owner occupancy.
DSCR often closes quicker because there's no income verification. Conventional loans require IRS transcripts and employment verification that can add 5-10 days.
Conventional requires PMI with less than 20% down. DSCR never has mortgage insurance since all loans require 20%+ down payment.
You'd refinance from conventional to DSCR if you convert your Windsor home to a rental. It's a new loan application, not a conversion.
DSCR has no limit on financed properties. Conventional caps most borrowers at 10 financed properties total, including your primary residence.