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in Calexico, CA
Calexico investors face a critical choice when financing rental properties: DSCR loans for long-term holds or hard money for quick flips. Both bypass traditional income verification, but they serve completely different investment strategies.
DSCR loans qualify you based on rental income potential, offering longer terms and lower rates. Hard money loans focus on the property's value, providing fast funding for short-term projects. Understanding which fits your Calexico investment plan saves you thousands.
DSCR loans evaluate whether a Calexico rental property generates enough income to cover its mortgage payment. Lenders calculate the debt service coverage ratio by dividing monthly rent by the monthly mortgage payment. A ratio above 1.0 typically qualifies.
These loans offer 30-year terms with rates comparable to conventional mortgages. You can finance single-family homes, multi-units, or commercial properties. No tax returns or W-2s required—just proof the property can pay for itself.
Rates vary by borrower profile and market conditions. Most DSCR lenders require 20-25% down and credit scores above 640. Closing takes 30-45 days, similar to traditional mortgages.
Hard money loans in Calexico fund deals that need to close fast—often within days. These asset-based loans care primarily about the property's current and after-repair value. Your personal finances matter less than the deal's potential.
Terms typically run 6-24 months with interest-only payments. Rates start around 8-12% plus 2-4 points at closing. The speed and flexibility come at a premium, but they enable opportunities traditional financing can't touch.
Hard money lenders focus on your exit strategy. Are you flipping the property? Refinancing into permanent financing? They need to see how you'll pay off the loan. Most require 10-30% down depending on experience and deal quality.
The cost difference between these loans is substantial. DSCR loans typically carry rates 1-2% above conventional mortgages with minimal points. Hard money runs 8-12% with 2-4 points upfront. On a $300,000 Calexico property, that's roughly $1,500 monthly for DSCR versus $2,500 for hard money.
Timeline separates these products even more dramatically. DSCR loans close in 30-45 days like traditional mortgages. Hard money can fund in 3-10 days when you need to move quickly on a distressed property or competitive bid.
Your investment strategy dictates the right choice. Planning to rent a Calexico property long-term? DSCR loans provide affordable, sustainable financing. Buying a fixer-upper to renovate and resell? Hard money's speed and flexibility justify the higher cost.
Choose DSCR loans when acquiring turnkey or light-renovation Calexico rentals you plan to hold. The lower monthly payments maximize cash flow, and the 30-year terms provide stability. You need patience for the longer approval process, but the savings compound over time.
Select hard money when speed matters more than cost. Foreclosure auctions, estate sales, and competitive markets favor quick closings. Use hard money to acquire and renovate, then refinance into a DSCR loan once the property is rent-ready and stabilized.
Many successful Calexico investors use both strategically. Hard money finances the acquisition and rehab. DSCR loans provide the permanent financing. This combination lets you move fast on opportunities while securing long-term, affordable financing.
Yes, this is a common strategy. Complete your renovations, secure a tenant, then refinance into a DSCR loan with better terms. Most investors plan this transition from day one.
DSCR loans require move-in ready or light-renovation properties. Hard money lenders accept distressed properties and heavy rehab projects that DSCR lenders won't touch.
DSCR loans require market rent analysis or actual lease agreements. Hard money lenders focus on after-repair value and exit strategy, caring less about current rental income.
DSCR loans typically require some real estate investment experience. Hard money lenders may work with first-timers if the deal is strong and you have sufficient reserves.
DSCR loans generally need 640+ credit scores. Hard money lenders are more flexible, sometimes approving borrowers with scores in the 500s if the deal and down payment are strong.