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in Hawthorne, CA
Hawthorne investors have two main options when personal income won't qualify them for traditional financing. DSCR loans work for buy-and-hold properties with rental income, while hard money fits fix-and-flip projects or quick acquisitions.
Both skip tax returns and W-2s, but they serve completely different strategies. Pick the wrong one and you'll overpay by thousands or miss your deal window entirely.
DSCR loans qualify you based on the property's rental income divided by its debt obligation. You need a ratio above 1.0, meaning rent covers the mortgage payment plus taxes and insurance.
These are long-term loans with 30-year amortization and rates typically 1-2% above conventional. Expect 20-25% down and credit scores around 620 minimum for approval.
DSCR works best when you're buying a turnkey rental or a property that needs minor cosmetic work. Close in 3-4 weeks and hold the property as long as you want.
Hard money loans fund based on the property's current or after-repair value, not your income or credit. Lenders care about your experience flipping properties and the deal's profit margin.
You'll pay 9-12% rates with 2-4 points upfront, and terms run 6-24 months maximum. Most require 10-20% down, but some lenders go up to 90% loan-to-cost on strong deals.
Use hard money when speed matters more than cost. You can close in 7-10 days and fund renovations from the same loan using draws tied to construction milestones.
Local decision guide
Use this comparison to weigh DSCR Loans and Hard Money Loans through local payment fit, eligibility, documentation, and timing before choosing a path in Hawthorne.
Hawthorne investors have two main options when personal income won't qualify them for traditional financing. DSCR loans work for buy-and-hold properties with rental income, while hard money fits fix-and-flip projects or quick acquisitions.
Both skip tax returns and W-2s, but they serve completely different strategies. Pick the wrong one and you'll overpay by thousands or miss your deal window entirely.
DSCR loans qualify you based on the property's rental income divided by its debt obligation. You need a ratio above 1.0, meaning rent covers the mortgage payment plus taxes and insurance.
Rate difference is massive: DSCR runs 7-8.5% while hard money hits 9-12% plus points. But hard money closes in a week versus a month for DSCR, which matters when competing with cash buyers in Hawthorne.
DSCR requires stable rental income documentation and the property must cash flow from day one. Hard money doesn't care about current income since you're selling after renovations, not holding long-term.
Exit strategy determines which loan works. DSCR borrowers refinance to conventional or hold indefinitely. Hard money borrowers must sell or refi within 6-24 months or face expensive extensions.
Choose DSCR when buying Hawthorne rental properties you plan to hold for years. The property needs to be rent-ready or require only minor repairs you can fund with reserves.
Pick hard money for distressed properties near LAX or along Hawthorne Boulevard that need major rehab. Also use it when you're competing against cash offers and need to close fast.
Many Hawthorne investors use both: hard money to acquire and renovate, then refinance into DSCR once the property is rented and stabilized. This combination maximizes speed and long-term affordability.
Not typically. DSCR lenders want properties generating rent within 30-60 days of closing. Major rehabs need hard money first.
Most lenders offer 3-6 month extensions at 1-2% of the loan balance per extension. Avoid this by planning your exit before you close.
Yes. DSCR works great for 2-4 units with rental history. Hard money funds multi-unit value-add deals where you'll renovate and raise rents.
Hard money cares less about credit since it's asset-based. DSCR typically requires 620+ credit scores for approval.
Correct. Neither requires tax returns or income verification. DSCR uses property income, hard money uses property value.