Question 1

Can I use a DSCR loan to buy near UC Davis?

Accepted Answer

Yes. DSCR lenders don't restrict location. Student rentals near UC Davis can work well if the rent-to-mortgage ratio hits 1.0 or better.

Question 2

Do DSCR loans require a higher credit score?

Accepted Answer

Most DSCR lenders want 680+. That's higher than conventional minimums. Stronger credit also unlocks better DSCR rates.

Question 3

What is a DSCR ratio and how is it calculated?

Accepted Answer

DSCR is monthly gross rent divided by total monthly debt payment. A 1.0 means rent exactly covers the mortgage. Above 1.0 is better.

Question 4

Which loan has the lower interest rate?

Accepted Answer

Conventional rates are generally lower than DSCR rates. Rates vary by borrower profile and market conditions for both loan types.

Question 5

Can a self-employed buyer in Davis use a conventional loan?

Accepted Answer

Yes, but lenders will require two years of tax returns. If write-offs reduce your taxable income, qualifying gets harder. DSCR avoids that problem for rental properties.

Question 6

Is a DSCR loan considered a non-QM loan?

Accepted Answer

Yes. DSCR is a non-QM product. It falls outside standard agency guidelines, which is why lenders rely on property income instead of personal income.

Conventional vs DSCR Loans in Davis, CA