FHA, Conventional, or DSCR? Here’s What Actually Makes Sense in Today’s California Market

If you're trying to buy in California right now, the biggest decision isn't just the house — it’s the loan you use to get it.

With rising inventory and a mixed-interest-rate environment, buyers need to structure smart from day one. So let’s break it down: FHA vs. Conventional vs. DSCR. Which is right for you?

🟩 FHA Loans (Great for First-Time Buyers or Lower FICO)

If your credit is in the 620–680 range, or your down payment is tight, FHA is still one of the most powerful tools — especially in markets like Riverside, San Bernardino, and Long Beach.

Why FHA might make sense:

• 3.5% down payment

• Flexible debt-to-income ratios

• More forgiving on credit history

• Seller credits allowed (great for buying down your rate)

Watch out for: Upfront mortgage insurance + monthly MI (unless you plan to refinance later).

🟦 Conventional Loans (Best for 680+ FICO and Strong Income)

If your FICO is solid and you can put at least 5–10% down, conventional gives you more control long term.

Why go conventional:

• No upfront mortgage insurance

• MI drops off once you reach 20% equity

• More competitive for higher-priced homes (especially above FHA limits)

Tip: Seller credits are still allowed — but often capped at 3% unless you go higher down payment.

🟧 DSCR Loans (For Investors and Self-Employed Buyers)

Not buying for your primary residence? DSCR (Debt Service Coverage Ratio) loans are built for rental property buyers or self-employed borrowers who want to qualify based on property cash flow, not personal income.

Why investors love DSCR:

• No income docs needed

• Qualify based on rental income

• Can close in an LLC or trust

• Great for short-term rentals, flips, or long-term buy & holds

Heads up: Down payments typically start at 20–25%, and rates are slightly higher — but it’s fast money if the deal pencils.

🎯 So… What’s Your Strategy?

Choosing the right loan type isn't just about qualification — it's about cash flow, risk, and long-term ownership strategy. Here's how I help:

• ✅ Scenario planning (real numbers, not guesses)

• ✅ Rate buydown vs. closing cost comparisons

• ✅ Real conversations — not sales pitches

👇 Want clarity on your numbers?

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