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in La Verne, CA
La Verne investors face a choice: DSCR loans for rental income properties or hard money for quick flips and rehabs. Both skip traditional income verification, but they serve completely different strategies.
DSCR loans underwrite based on rental cash flow. Hard money underwrites based on property value and equity. Your investment timeline determines which one makes sense.
DSCR loans work when rental income covers the mortgage payment. Lenders calculate the property's monthly rent divided by the monthly PITI payment. A ratio above 1.0 typically qualifies.
These are long-term loans with 30-year terms and relatively competitive rates. You're proving the investment works on paper, not through tax returns. Closes in 3-4 weeks on average.
Best for investors building rental portfolios in La Verne's stable single-family market. You can finance multiple properties without job income hitting your debt-to-income ratio.
Hard money loans fund based on the property's after-repair value and your equity position. Lenders focus on the deal itself: purchase price, rehab budget, and exit strategy.
These are short-term bridge loans, typically 6-24 months. Rates run significantly higher than DSCR loans because you're paying for speed and flexibility. Approval happens in days, funding in 1-2 weeks.
Used for fix-and-flip projects, major renovations, or time-sensitive acquisitions. You need a clear exit plan: refinance to conventional financing or sell the property.
DSCR rates typically run 1-2% above conventional investor loans. Hard money rates start around 9-12% with points at closing. That's the cost of a 10-day approval versus a 30-day process.
DSCR loans require the property to cash flow from day one. Hard money doesn't care about current income because you're renovating or repositioning. You're borrowing against future value, not present rent.
Down payment requirements differ too. DSCR loans want 20-25% down on investment properties. Hard money lenders typically fund 70-80% of purchase price, meaning you bring 20-30% down plus rehab costs.
Choose DSCR when you're buying a rental property that's already rent-ready or needs minor cosmetic work. You want long-term financing with rates you can hold for years while building equity through tenant payments.
Choose hard money when you're flipping a property, doing a major rehab, or need to close fast on a deal. You're paying for speed and certainty, planning to exit within 12-18 months maximum.
Many La Verne investors use both strategically. Hard money to acquire and renovate a distressed property, then refinance into a DSCR loan once it's stabilized and rented. That's the classic BRRRR strategy.
Yes, but lenders use market rent estimates, not your actual lease. An appraiser determines fair market rent for the property based on comparable rentals in La Verne.
Hard money can close in 7-14 days with clear title. DSCR loans typically take 3-4 weeks because they require full appraisals and underwriting.
Neither requires W-2s or tax returns for qualification. DSCR qualifies on property income; hard money qualifies on asset value and equity position.
DSCR loans typically require 620-660 minimum credit. Hard money lenders are more flexible, often approving down to 580 if equity position is strong.
Yes, this is common after completing rehab and stabilizing rental income. You'll need 6-12 months of seasoning and documented rental cash flow for DSCR approval.