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in Covina, CA
Covina investors need different financing for different plays. DSCR loans work for cash-flowing rentals you plan to hold. Hard money covers quick flips and projects where traditional lenders won't touch the property yet.
Both skip your W-2 income and tax returns. The difference is timeline and purpose. DSCR gives you 30-year terms at rates near conventional loans. Hard money gets you funded in days but costs more and comes due in 12-24 months.
DSCR loans qualify you on rental income alone. Lenders divide monthly rent by your total housing payment (PITI). A ratio above 1.0 means the property pays for itself. Most lenders want 1.0-1.25 minimum to approve the loan.
You get 30-year fixed terms with rates 1-2% above conventional mortgages. Expect to put down 20-25% on single-family rentals in Covina. Credit minimums run 620-680 depending on the lender and property type.
These loans close in 3-4 weeks, same timeline as traditional purchase loans. You can buy multiple properties without hitting debt-to-income walls since your personal income never enters the equation.
Hard money lenders fund based on property value, not income or credit. They lend 65-75% of current or after-repair value. The property is the collateral. Your experience and exit strategy matter more than your FICO score.
Rates run 9-14% with 2-4 points upfront. Loans mature in 6-24 months, sometimes with interest-only payments. You pay for speed and flexibility. Funding happens in 5-10 days once the lender approves the deal and property.
Hard money shines on distressed Covina properties that need work before they qualify for traditional financing. You buy and rehab with hard money, then refinance to DSCR or conventional once the property stabilizes.
Cost separates these loans most. DSCR rates sit around 7-8% right now. Hard money starts at 9% and climbs from there. DSCR has normal closing costs. Hard money adds 2-4 points to your loan amount upfront.
Timeline is the trade-off. DSCR takes a month to close. Hard money closes the same week if you need it. DSCR gives you decades to pay it back. Hard money comes due in under two years, forcing a sale or refinance.
Property condition matters too. DSCR lenders want rentable properties that appraise clean. Hard money lenders fund properties most banks won't touch until you fix them up.
Use DSCR when you're buying a rental property in Covina that already generates income. The numbers need to work from day one since approval depends on current rent covering the mortgage. You want long-term financing and predictable payments.
Use hard money when speed matters or the property needs serious work. You're flipping a house on Hollenbeck. You found a probate sale that closes in two weeks. You're converting a single-family to an ADU rental and need construction funding.
Most active investors use both. Hard money gets you into deals fast. DSCR refinances you into permanent financing once the property performs. The hard money exit is often a DSCR loan once you've got a tenant in place.
No. DSCR lenders need current rental income and a property that appraises in rentable condition. Use hard money for the purchase and renovation, then refinance to DSCR.
DSCR loans run 7-8% right now. Hard money starts at 9% and goes up from there. You pay more for hard money's speed and flexibility.
Yes. DSCR uses standard appraisals to determine value. Hard money often needs two appraisals: current value and after-repair value if you're renovating.
Usually yes. Hard money lenders care more about the property and your exit plan than your credit score. Expect higher rates with credit below 600.
DSCR is safer for beginners buying turnkey rentals. Hard money requires renovation experience and a solid exit strategy since the loan comes due fast.