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in Los Angeles, CA
Los Angeles investors often choose between DSCR loans and hard money based on timeline and property condition. DSCR works for rental income plays, hard money for quick flips.
Both skip W-2 income verification, but they serve completely different strategies. One's built for long-term holds, the other for speed and exit.
DSCR loans qualify you on rental income alone—lenders divide monthly rent by the mortgage payment. You need a ratio above 1.0, meaning rent covers the debt.
Terms run 30 years fixed, rates sit 1-2% above conventional. Most lenders want 20-25% down, 640+ credit, and the property must be rentable at closing.
This works for investors buying turnkey rentals or light rehabs in established LA neighborhoods. You're not racing a 12-month balloon payment.
Hard money lenders fund based on property value, not your finances or the property's current condition. They'll close in 7-14 days on distressed properties banks won't touch.
Expect 8-12% rates, 2-4 points upfront, and 6-12 month terms. Loan-to-value caps at 65-75%, so you need substantial cash or equity.
This is the tool for competitive all-cash offers on fixer-uppers across LA. You buy fast, renovate, then refinance or sell before the note matures.
Timeline splits these products—DSCR takes 30-45 days to close, hard money does 1-2 weeks. Cost differs just as sharply: DSCR runs 7-9% with minimal fees, hard money hits 10-14% all-in with points.
Property condition matters more with DSCR. Lenders want rent-ready units with paying tenants or immediate rental potential. Hard money funds tear-downs and major gut jobs.
Exit strategy dictates the right choice. DSCR borrowers hold for cash flow and appreciation. Hard money borrowers flip within a year or refi into permanent financing.
Choose DSCR if you're buying a rental property you plan to hold. The numbers work when monthly rent covers your mortgage and you want stable, long-term financing.
Hard money fits when speed matters more than cost—competing against cash buyers, buying off-market deals, or funding heavy renovations. You need a clear exit within 12 months.
Most LA investors use both at different times. DSCR for the duplex in Mid-City you'll hold, hard money for the distressed single-family in Van Nuys you'll flip.
Yes, that's a common strategy. Close fast with hard money, complete renovations, stabilize rent, then refi into a 30-year DSCR loan.
Hard money approves easier—it's all asset-based. DSCR requires better credit and a property generating sufficient rental income.
No. Both are strictly for investment properties. You cannot live in a property financed with DSCR or hard money.
DSCR typically requires 640 minimum. Hard money lenders care less about credit, some approve with scores in the 500s.
Yes. Neither loan type requires W-2s or tax returns for qualification purposes.