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in Lakewood, CA
Lakewood investors face a choice between two non-QM routes. DSCR loans use rental income to qualify you. Hard money uses the property itself as collateral.
Both skip W-2 verification and personal income. But they serve different timelines and investment goals. One's built for buy-and-hold. The other's built for speed.
DSCR loans qualify you based on rental income divided by mortgage payment. You need a ratio above 1.0 for most lenders. Some approve at 0.75 if you compensate with larger down payments.
Terms run 30 years with rates typically 1-2% above conventional. You'll pay more than traditional loans but less than hard money. Expect 20-25% down and a 620+ credit score minimum.
Hard money lenders fund based on property value and exit strategy. They don't care about your income or credit score. Approval takes days, not weeks. Rates run 9-15% with 2-5 points upfront.
Terms max out at 12-24 months. These are bridge loans for acquisitions, rehabs, or quick flips. You pay for speed and flexibility. Most Lakewood investors use these to secure off-market deals before refinancing out.
DSCR loans cost less but take 30-45 days to close. Hard money costs more but closes in 7-14 days. DSCR needs rental income documentation and appraisals. Hard money needs an exit plan and equity cushion.
Rate spread is massive. DSCR runs 7-9% depending on credit and down payment. Hard money starts at 9% and climbs to 15% based on deal risk. DSCR amortizes over 30 years. Hard money is interest-only with a balloon payment.
Use DSCR for Lakewood rental properties you plan to hold. The lower rate saves thousands annually on a long-term hold. Use hard money when speed matters more than cost—competing offers, foreclosure auctions, or distressed properties needing immediate rehab.
Many Lakewood investors use both in sequence. Hard money to acquire and renovate. DSCR to refinance into permanent financing once the property's rent-ready. This strategy maximizes speed on acquisition and cost efficiency on the hold.
No. DSCR loans require rental income, which flips don't generate. Use hard money for flips, then refinance to DSCR if you decide to hold the property as a rental.
DSCR wins on annual cost despite higher closing fees. Hard money's 12%+ rate and points typically cost double what you'd pay on a DSCR loan over the same period.
Barely. Most approve borrowers with scores under 600 if the deal has enough equity. They lend on the property's value and your exit plan, not your credit history.
Yes, if the property generates rental income and meets DSCR requirements. Most Lakewood investors plan this exit before taking hard money. Verify rental comps support a 1.0+ DSCR ratio first.
DSCR typically needs 20-25% down. Hard money ranges from 10-30% depending on property condition and your experience level. Riskier deals require larger equity cushions.