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in Alhambra, CA
Alhambra investors choosing between DSCR and hard money loans face different tools for different jobs. DSCR loans work for rental holds with steady cash flow. Hard money fits quick flips and heavy rehabs where speed trumps cost.
Both skip W-2 income verification, but the similarities end there. DSCR loans resemble conventional mortgages with lower rates and longer terms. Hard money operates more like bridge financing with higher costs and tight timelines.
DSCR loans qualify you based on rental income divided by monthly debt. Lenders want that ratio above 1.0, meaning rent covers the mortgage payment. Rates typically run 1-2 points above conventional loans with 15 or 30-year fixed terms.
These work best for Alhambra properties already rented or rent-ready. No renovations, no waiting for appraisals to support future value. The property generates income today that justifies the loan amount.
Hard money lenders fund based on after-repair value, not current condition. They'll lend 65-75% of what the property will be worth after you fix it. Terms run 6-24 months with rates between 9-15% plus 2-5 points upfront.
Speed defines hard money. Deals close in 7-14 days versus 30-45 for DSCR loans. You pay for that speed with higher costs, but it lets you grab properties other buyers can't finance quickly enough to win.
Rate spread tells the story. DSCR loans cost 7-9% over 30 years. Hard money runs 10-15% for 12 months. A $500K loan means $3,300 monthly on DSCR versus $4,500 on hard money, but DSCR won't fund a gut rehab.
Timeline and property condition create the real divide. DSCR needs rent-ready properties and 30-day closes. Hard money finances distressed properties in two weeks. Exit strategy matters too—DSCR is your permanent loan, hard money requires refinancing or selling within a year.
Use DSCR when you're buying turnkey rentals in Alhambra or properties needing minor cosmetic work. The lower rate and long term let you hold for cash flow without refinance pressure. Your exit is selling years later or never.
Choose hard money for distressed properties needing major rehab or when you must close fast to win a deal. The high cost only hurts if you hold too long. Plan to flip within 6-9 months or refinance into DSCR once repairs finish and rent stabilizes.
Yes, that's the standard play for value-add deals. Buy and renovate with hard money, then refinance to DSCR once the property rents and cash flows.
Hard money closes in 7-14 days. DSCR loans take 30-45 days like conventional mortgages because they require full appraisals and title work.
DSCR typically needs 20-25% down. Hard money lends up to 75% of after-repair value, so your down payment depends on purchase price versus future value.
DSCR lenders want 660+ for best terms, 620 minimum. Hard money cares less about credit, sometimes approving scores in the 500s if equity is strong.
No. Both are investor products for rental properties or flips. You need conventional, FHA, or other owner-occupied loans for primary homes.