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in Lomita, CA
Lomita investors face a choice between two non-QM paths when traditional loans won't work. DSCR loans focus on rental income; hard money focuses on property value and speed.
Both skip W-2s and tax returns, but they serve different needs. Your timeline and exit strategy determine which makes sense.
DSCR loans qualify you on rental income alone. Lenders calculate your property's monthly rent divided by the mortgage payment—that's your ratio.
You need at least 1.0 DSCR (rent covers the payment), though some lenders go as low as 0.75 with compensating factors. Expect 20-25% down and standard 30-year terms.
These work for buy-and-hold investors who want long-term financing without proving personal income. Rates run higher than conventional loans but lower than hard money.
Hard money lenders base approval on the property itself, not your income or the rent it generates. They lend on after-repair value for fix-and-flip projects.
Terms run 6-24 months, interest-only, with rates often 9-12%. You'll put down 10-30% depending on experience and deal strength.
Speed is the selling point—approvals in days, closings in two weeks. Investors use these to grab deals that won't wait for traditional financing.
DSCR loans cost less and run longer—think buy-and-hold rentals. Hard money costs more but moves faster—think flips or bridge financing until you can refinance.
DSCR requires the property to cash flow from day one. Hard money doesn't care about rent; it cares about your exit plan and the property's potential value.
Lomita has single-family homes that work for both strategies. DSCR fits stable rental neighborhoods; hard money fits value-add deals where speed beats price.
Choose DSCR if you're buying to rent long-term and the property already generates income. You'll save on rates and get a loan that looks more like conventional financing.
Choose hard money if you need to close in two weeks, plan to renovate and flip, or can't wait for a slower approval process. You're paying for speed and flexibility.
Some investors use both: hard money to acquire and renovate, then refinance into a DSCR loan once the property is rented and stabilized.
No, DSCR loans require rental income and are designed for properties you'll hold. Hard money is the right tool for flips.
Hard money closes in 1-2 weeks. DSCR loans typically take 3-4 weeks, similar to conventional financing timelines.
Yes. DSCR loans need 20-25% down. Hard money lenders typically require 10-30% depending on the deal and your experience.
DSCR loans run lower, often 7-9%. Hard money rates typically range from 9-12% due to short-term risk and speed.
Yes, many investors do exactly this. Complete your rehab, get a tenant in place, then refinance to lower long-term rates.