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in Porterville, CA
Conventional loans and DSCR loans solve different problems in Porterville's real estate market. One finances your primary residence with strict income verification. The other finances rental properties based solely on their cash flow.
Most Porterville buyers choose conventional financing for homes they'll live in. Investors who own multiple properties or can't document W-2 income use DSCR loans instead.
Conventional loans require full income documentation—tax returns, W-2s, pay stubs. Lenders verify your debt-to-income ratio stays below 50%. You 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 everyone else. You'll pay PMI under 20% down until you hit that equity threshold. Rates vary by borrower profile and market conditions, but conventional typically offers the lowest available.
DSCR loans skip your personal income entirely. Lenders only care if the rental property generates enough income to cover its own mortgage payment. They calculate the property's monthly rent divided by the mortgage payment—that's your debt service coverage ratio.
You need 1.0 DSCR minimum, though 1.25+ unlocks better pricing. Expect 20-25% down and rates 1-2 points higher than conventional. No tax returns, no pay stubs, no employment verification. The property itself qualifies.
Conventional loans verify your ability to repay through job history and documented income. DSCR loans verify the property's ability to cover itself through current or projected rent. That's the fundamental split—personal income versus property income.
Conventional loans offer lower rates and smaller down payments but require stable W-2 employment. DSCR loans cost more upfront but work for self-employed investors, those with multiple properties, or anyone who can't document traditional income. Rates vary by borrower profile and market conditions.
Use conventional financing if you're buying a home to live in or have W-2 income you can document. The rates and down payment options beat DSCR by a wide margin. Most Porterville primary residence buyers choose conventional.
Switch to DSCR if you're buying investment property and can't or won't document personal income. This includes investors who show low taxable income, own multiple rentals, or work as 1099 contractors. The property's rent must cover the mortgage payment with room to spare.
No. DSCR loans only finance investment properties that generate rental income. Primary residences require conventional or government-backed financing.
Conventional loans require 620 minimum, with best pricing at 740+. DSCR loans typically need 660-680 minimum depending on the lender.
They divide monthly rent by the mortgage payment (PITIA). A $1,500 rent with a $1,200 payment equals 1.25 DSCR—enough to qualify with most lenders.
You'd refinance from one loan type to another. This makes sense if you convert your primary residence to a rental and want to eliminate income verification on future properties.
DSCR loans often close faster because they skip income verification. Conventional loans require full employment and income documentation, which adds processing time.