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in Sonora, CA
Sonora real estate attracts both owner-occupants and rental property investors. Conventional loans work great for primary homes, but they disqualify many investors with complex tax returns.
DSCR loans flip the script by qualifying you on rental income, not W-2s or tax returns. If you're building a portfolio in Tuolumne County, understanding this difference changes what you can buy.
Conventional loans are the default for primary homes and some investment properties. You'll need documented income, 620+ credit, and DTI under 50%.
Rates are competitive because Fannie Mae and Freddie Mac back these loans. Investment properties need 15-25% down, and you can finance up to 10 properties through conventional channels.
DSCR loans ignore your personal income entirely. Lenders approve you based on whether the property's rental income covers the mortgage payment plus expenses.
You need a DSCR ratio above 1.0, meaning rent exceeds the debt payment. No tax returns, no pay stubs, no employment verification. Credit requirements start around 660, and you'll put 20-25% down.
Conventional loans look at your entire financial picture: income, debts, credit, assets. DSCR loans look at one thing: does the rent cover the payment? That single difference determines which investors can use which loan.
Rates differ too. Conventional beats DSCR by 50-100 basis points when you qualify for both. But if you're self-employed with depreciation eating your taxable income, conventional won't approve you at any rate.
Use conventional for your first rental property if you have W-2 income and clean tax returns. You'll get the best rate and build relationships with traditional lenders.
Switch to DSCR once you hit property #3-4 or when your tax strategy creates low reported income. Most serious investors in Sonora end up using DSCR because it scales without income limits.
Yes, but you'll pay a higher rate than conventional. If you have documented income, conventional saves money on property #1.
Most lenders want 1.0 or higher, meaning rent covers the full mortgage payment. Some allow 0.75 with larger down payments.
Only if you occupy it 51% of the year. Pure investment properties need 15-25% down and qualify as traditional rentals.
DSCR often closes quicker because there's no income verification. You skip the tax return and employment check, shaving 5-7 days off the timeline.
Yes, and investors do this to pull equity without income verification. Rates will increase, but you unlock capital without tax return scrutiny.