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in Cudahy, CA
Cudahy investors face a choice between two non-QM loan types that ignore W-2 income entirely. DSCR loans use rental income to qualify you for long-term holds, while hard money loans fund quick flips based on property value.
Both skip tax returns and employment verification. The difference comes down to your timeline and exit strategy. One finances 30-year cash flow plays, the other funds 12-month renovations.
DSCR loans approve you based on the property's rental income divided by the mortgage payment. You need a ratio above 1.0, meaning rent covers the mortgage. Most lenders want 1.25 to give you a cushion.
These are 30-year fixed or ARM loans with rates 1-2% above conventional. You put down 20-25%, close in 3-4 weeks, and hold the property as a long-term rental. Think of it as a conventional loan for investors who can't show traditional income.
Hard money loans fund based on the property's after-repair value, not your financials. Lenders loan 65-75% of ARV, giving you capital to buy and renovate. You pay 8-12% interest with 2-4 points upfront.
Terms run 6-12 months because these aren't hold loans. You refinance out or sell the property to exit. Approval takes 5-10 days, and lenders care more about your flip experience than your credit score.
DSCR loans cost less but take longer and require stable rental income. Hard money costs more but funds deals conventional lenders won't touch. DSCR rates sit around 7-8%, hard money runs 9-12% plus points.
DSCR lenders want rental comps and lease agreements. Hard money lenders want your renovation budget and exit strategy. One finances income-producing assets, the other finances value-add projects. The underwriting focuses on completely different risk factors.
Use DSCR loans when you're buying stabilized rentals or refinancing properties already generating rent. The lower rate and long term make sense for buy-and-hold strategies in Cudahy's rental market.
Use hard money when you're buying distressed properties, need to close in under two weeks, or can't meet DSCR requirements yet. Flippers use this to control assets before traditional financing kicks in. The higher cost is temporary because you're not holding long-term.
Yes, that's a common strategy. Buy and renovate with hard money, then refinance into a DSCR loan once the property is rented and stabilized.
DSCR loans typically want 660+ credit. Hard money lenders care less about credit and more about your experience and the deal itself.
DSCR loans yes, if the numbers work. Hard money lenders often want proof you've completed flips before or require experienced partners.
No. Both are investment-only loans. DSCR requires rental income, and hard money is designed for renovation and resale projects.
Hard money closes in 5-10 days. DSCR loans take 3-4 weeks because lenders verify rental income and order full appraisals.