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in Farmersville, CA
These two loans serve completely different buyers in Farmersville. Conventional loans work for people moving into the property. DSCR loans exist for investors who'll rent it out.
The qualification process changes entirely between them. One checks your W-2 and tax returns. The other ignores your income and looks only at rent potential.
Conventional loans require stable employment history and documented income. You'll need credit scores starting at 620, though 740+ gets you the best rates. Down payments range from 3% for first-time buyers to 20% for investment properties.
These loans cap your debt-to-income ratio at 50% in most cases. Lenders verify every income source through tax returns, W-2s, and pay stubs. You'll face full underwriting on employment, assets, and credit history.
DSCR loans qualify you based on rental income divided by the mortgage payment. The property needs to generate enough rent to cover the debt. Most lenders want a ratio of 1.0 or higher, meaning rent equals or exceeds the payment.
Your personal income doesn't matter for approval. No tax returns, no pay stubs, no employment verification. You'll need 20-25% down and credit scores around 660-680 minimum. Rates run 0.5-1.5% higher than conventional.
The income requirement splits these loans apart. Conventional loans count your W-2, bonuses, and side income. DSCR loans only count what the property will rent for, ignoring everything you earn.
Down payments differ significantly. Conventional allows 3% down for owner-occupants. DSCR demands 20-25% regardless. Rate differences follow the same pattern—conventional beats DSCR by half a point to a full point when credit and income are strong.
Choose conventional if you're living in the property or can document stable income. The lower rates and smaller down payments make it the obvious pick for buyers who qualify traditionally. Farmersville properties buying as primary residences should default to conventional first.
Pick DSCR if you're buying rental property but have tax write-offs that crush your documented income. Self-employed investors with strong cash flow but low taxable income use these constantly. You pay more upfront and monthly, but you skip the income documentation maze entirely.
No, DSCR loans only work for investment properties. The entire qualification depends on rental income, so lenders require you to rent the property out.
DSCR loans often close quicker because there's no income verification. You skip the employment checks and tax return reviews that slow conventional loans down.
Yes, but DSCR loans let you pull cash without income verification. Conventional cash-out refi requires full income documentation and stricter debt ratios.
Yes, but you must live there first as agreed. Most conventional loans require 12 months of occupancy before converting to rental use.
DSCR handles non-traditional properties better since approval hinges on rental income, not property type. Conventional loans get pickier about agricultural use and zoning.