Loading
in Burbank, CA
Burbank investors face a choice between two non-QM loan types that ignore W-2 income but work in completely different ways. DSCR loans are rental property financing based on cash flow, while hard money loans fund fix-and-flips using the property as collateral.
Most borrowers confuse these products because both skip tax returns and traditional income verification. But your investment timeline determines which one makes sense—DSCR for long-term rentals, hard money for quick renovations and resales.
DSCR loans qualify you based on whether the rental income covers the mortgage payment. Lenders calculate the debt service coverage ratio by dividing monthly rent by the monthly housing expense—anything above 1.0 typically works.
These loans close in 3-4 weeks and carry rates currently ranging from 7% to 9.5% depending on credit and down payment. You need at least 20% down, a 620+ credit score, and market-rate rent that supports the payment.
Think of DSCR as traditional financing for investors who can't or won't show personal income. It's for properties you plan to hold and rent for years, not flip in six months.
Hard money loans ignore income entirely and focus on the property's after-repair value. Lenders advance 65-75% of the purchase price plus up to 100% of renovation costs, funding both acquisition and rehab in one package.
Rates run 9% to 12% with 2-4 points upfront, and terms typically last 12-24 months. Credit matters less than the deal itself—I've seen approvals with scores in the 500s when the property shows strong profit potential.
You're paying for speed and flexibility. Hard money closes in 7-10 days with minimal documentation, making it ideal for competitive Burbank markets where all-cash offers win.
The rate gap tells the story: DSCR loans price like standard mortgages while hard money costs double. That's because DSCR assumes long-term ownership with stable rental income, while hard money bets on your ability to renovate and exit quickly.
Down payment structures differ completely. DSCR requires 20-25% of purchase price and that's it. Hard money advances 65-75% of purchase but then funds rehab costs separately, often requiring only 10% total cash from you.
Exit strategy drives everything. DSCR loans carry 30-year amortization and expect you to keep the property. Hard money assumes you'll refinance into permanent financing or sell within 12 months—that's why it's structured as a bridge.
Use DSCR when you're buying a rental that's already in good condition and generating market-rate rent. It works for Burbank multi-family properties near the studios where tenants stay long-term and you're building equity over years.
Hard money fits properties that need substantial work before they can be rented or sold. If you're buying a distressed single-family home near Magnolia Park to renovate and flip, hard money funds the purchase and construction with one loan.
Your profit timeline matters most. Paying 8% on a DSCR loan over five years costs less than paying 10% plus points for 12 months if you're flipping. Run the numbers based on how long you'll hold the property.
No, DSCR loans require the property to generate rental income immediately. If you're renovating before renting or selling, hard money is the correct product.
Hard money lenders accept scores in the 500s if the deal is strong. DSCR loans typically require 620+ credit with some flexibility down to 600.
Neither requires W-2s or tax returns. DSCR uses a rent roll or lease, while hard money focuses entirely on property value and renovation budget.
Yes, that's the standard exit strategy. Complete renovations, stabilize rental income, then refinance into lower-rate DSCR financing within 12 months.
Hard money closes in 7-10 days versus 3-4 weeks for DSCR. Speed matters when competing against all-cash buyers near Media District properties.