Loading
in Downey, CA
Downey investors have two main paths when personal income won't qualify them: DSCR loans and hard money. Both ignore your W-2, but they work for completely different strategies.
DSCR loans fund rental properties based on cash flow. Hard money funds quick flips and rehabs based on property value. Mixing them up costs you thousands in the wrong loan.
DSCR loans are long-term rental financing that skip income verification entirely. Instead, lenders qualify you on the property's rent-to-payment ratio, typically requiring 1.0 or higher.
Terms run 30 years at rates 1-2% above conventional. You need 20-25% down, 620+ credit, and a property that can generate enough rent to cover the mortgage.
This works for buy-and-hold investors building rental portfolios. Downey's strong rental demand makes DSCR loans viable on most single-family and small multifamily properties.
Hard money loans are short-term bridge financing secured by the property itself. Lenders focus on after-repair value and equity, not income or credit scores.
Terms run 6-24 months with rates from 9-14%. You can close in days, fund 100% of rehab costs, and handle properties that won't qualify for traditional financing.
This works for flippers, major renovations, and distressed properties. Downey fix-and-flip deals use hard money to acquire and renovate before refinancing or selling.
The timeline separates these loans. DSCR gives you 30 years to hold and collect rent. Hard money gives you 12 months to renovate and exit.
Cost structure differs completely. DSCR charges 6-8% with standard closing costs. Hard money charges 10-13% plus 2-3 points upfront.
Qualification is opposite. DSCR needs proven rental income and decent credit. Hard money needs equity and a solid exit plan, period.
Choose DSCR if you're buying a rental property to hold long-term. The property needs to be rentable now or with minor fixes, and you need cash flow to cover the payment.
Choose hard money if you're flipping, doing major renovation, or need to close before traditional financing is ready. You must have a clear exit within 12-18 months.
Most Downey investors use both. Hard money funds the acquisition and rehab. DSCR refinances once the property is stabilized and rented. That's the professional play.
No. DSCR requires rental income and 30-year terms. Use hard money for flips where you'll sell within 12 months.
DSCR loans run 6-8% for 30 years. Hard money runs 10-13% for 12 months. DSCR is cheaper for holds, not flips.
Yes. DSCR qualifies on rental income only. Hard money qualifies on property value and equity.
Yes. That's the standard investor strategy. Use hard money to acquire and renovate, then refi to DSCR once rented.
Hard money closes in 5-10 days. DSCR takes 30-45 days like conventional loans.