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in Compton, CA
Compton's investment market moves fast. Both DSCR and hard money loans skip traditional income verification, but they serve completely different purposes.
DSCR works for buy-and-hold investors building rental portfolios. Hard money fits fix-and-flip projects that need capital in days, not weeks.
The right choice depends on your timeline and strategy. Long-term rental income or quick turnaround determines which loan makes sense.
DSCR loans qualify you based on rental income, not your tax returns. Lenders calculate the debt service coverage ratio by dividing monthly rent by the mortgage payment.
You need a ratio above 1.0 for most programs. A $2,500 rent covering a $2,000 payment gives you a 1.25 DSCR, which works for approval.
Terms mirror conventional loans with 30-year fixed options. Rates run 1.5-3% higher than traditional mortgages, but you avoid income documentation hassles.
Minimum credit scores typically start at 660. Down payments range from 20-25% depending on your DSCR and credit profile.
Hard money lenders fund based on property value, not your finances. They focus on the asset and your exit strategy, approving deals in 3-7 days.
Terms run 6-24 months with rates between 8-15%. Points at closing add 2-5% of the loan amount, making this expensive short-term capital.
Loan-to-value maxes out at 65-75% of purchase price. Some lenders include rehab costs, advancing funds as work completes on a draw schedule.
Credit matters less than equity and experience. Lenders care more about your flip track record and after-repair value than FICO scores.
Cost separates these loans dramatically. DSCR rates compete with conventional mortgages while hard money costs triple your interest expense.
Timeline is the tradeoff. DSCR takes 3-4 weeks to close, hard money funds in days when you need to move on a deal.
DSCR builds long-term wealth through rental income. Hard money extracts quick profits from distressed properties you can flip in months.
Qualification standards flip the script. DSCR requires stable rent and decent credit, hard money only cares about equity and exit strategy.
Choose DSCR when buying Compton rentals to hold. The income-based qualification and 30-year terms match buy-and-hold strategies perfectly.
Pick hard money for fix-and-flip projects. Speed matters more than cost when you're competing with cash buyers on distressed properties.
Some investors use both strategically. Hard money acquires and renovates, then DSCR refinances once the property rents and stabilizes.
Your experience level matters too. DSCR suits newer investors building portfolios, hard money requires confidence executing quick turnarounds.
No, DSCR requires rental income at closing. Hard money fits flips since it doesn't need tenant occupancy or lease agreements.
Hard money closes in 3-7 days. DSCR takes 3-4 weeks for appraisal, title work, and underwriting.
Yes, neither requires local residency. DSCR and hard money both serve remote investors without California employment.
DSCR typically requires 660+ credit. Hard money lenders may approve 580+ scores if equity and exit strategy are strong.
Yes, this is common strategy. Complete renovations, secure a tenant, then refinance into long-term DSCR financing.