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in Lynwood, CA
Lynwood investors face a choice between two non-QM paths that skip W-2 income verification. DSCR loans focus on rental cash flow for long-term holds, while hard money prioritizes equity for fast rehabs.
Both options work in Lynwood's competitive market, but they serve completely different timelines and exit strategies. Picking the wrong one costs you thousands in rate spreads and deal structure.
DSCR loans qualify you based on the property's monthly rent divided by its debt payment. If your rental income covers 1.0x to 1.25x the mortgage, most lenders approve without seeing your tax returns.
These loans work for investors buying stabilized rentals in Lynwood who want conventional-like terms. Expect 20-25% down, 6.5-9% rates, and 30-year amortization that matches traditional financing structure.
You hold the loan for years while collecting rent. No balloon payment forces a refinance or sale, so cash flow compounds without forced exits disrupting your returns.
Hard money lenders fund deals based on the property's after-repair value, not your income or the current condition. They lend 65-75% of ARV, which covers purchase price plus renovation costs for most Lynwood flips.
These loans close in under two weeks because underwriting focuses on exit strategy and equity cushion. Rates run 9-14% with 2-4 points upfront, pricing in the speed and risk profile.
You must refinance or sell within 12-24 months when the balloon payment hits. Most Lynwood investors use hard money for fix-and-flip projects or bridge financing until a property stabilizes for DSCR refinancing.
DSCR loans cost 6.5-9% for 30 years with minimal upfront fees. Hard money runs 9-14% for 12 months with 2-4 points at closing, making it 3-5x more expensive over equivalent holding periods.
DSCR lenders need appraisals, title, and rent comps, taking 3-4 weeks to close. Hard money skips most paperwork and funds in 5-10 days, but you pay a premium for that speed.
DSCR requires the property to cash flow from day one with tenants in place. Hard money finances vacant distressed properties that won't appraise or rent until renovations finish.
Use DSCR loans when you're buying a stabilized Lynwood rental with tenants and want to hold for appreciation and cash flow. The lower rate and 30-year term let you build equity while collecting monthly income.
Choose hard money when you're flipping distressed Lynwood properties or need fast funding to beat competing cash offers. You'll pay more, but the speed and flexibility justify the cost on short timelines.
Many investors use both: hard money for the initial purchase and rehab, then refinance into a DSCR loan once the property rents. This strategy maximizes speed upfront and minimizes cost long-term.
DSCR lenders require properties to be rent-ready at closing with stable cash flow. If renovations are needed, finance with hard money first, then refinance to DSCR after the property rents.
DSCR loans typically require 620+ credit scores for approval. Hard money lenders approve deals with scores in the 500s since they prioritize equity and exit strategy over borrower credit.
Hard money closes in 5-10 business days with minimal documentation. DSCR loans take 3-4 weeks due to appraisals, rent analysis, and standard underwriting processes.
Neither loan requires W-2s or tax returns. DSCR qualifies on property rent, hard money qualifies on deal equity and after-repair value instead of borrower income.
Hard money loans balloon in 12-24 months and aren't designed for long holds. Rates run 9-14%, making them prohibitively expensive compared to DSCR's 6.5-9% for extended timelines.
Both allow multiple properties, but hard money gives more concurrent project flexibility. DSCR lenders count existing rental debt, while hard money focuses on each deal's individual equity position.