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in Monterey Park, CA
Monterey Park investors face a choice: qualify on rental income with DSCR loans or fund fast with hard money. Both skip W-2 income verification, but serve different strategies.
DSCR works for buy-and-hold cash flow properties. Hard money fits fix-and-flip deals or urgent acquisitions when speed matters more than cost.
DSCR loans approve based on whether rent covers the mortgage payment. You need a ratio above 1.0 (rent exceeds debt service) to qualify without income docs.
Rates run 7-9% with 20-25% down payment required. Terms extend 30 years fixed, making them true rental portfolio financing. Closing takes 21-30 days.
You'll use 1007 rent schedules or lease agreements to prove income. Credit scores need to hit 620 minimum, though 680+ unlocks better pricing.
Hard money lenders fund based on after-repair value, not current condition. They'll lend 65-75% of ARV, expecting you to renovate and exit within 12 months.
Rates hit 10-14% with 2-4 points upfront. Terms run 6-24 months interest-only. You're paying for speed—funding in 5-10 days when deals require fast closes.
Credit matters less than experience and exit strategy. Most lenders want to see your flip plan and comparable sales proving your ARV projections.
Cost separates these products dramatically. DSCR runs 7-9% for 30 years. Hard money hits 10-14% plus points for 12 months. You're choosing between long-term affordability and short-term access.
Timeline matters too. DSCR takes 3-4 weeks to close. Hard money funds in a week. If you're competing against cash buyers in Monterey Park, hard money keeps you in the game.
Exit strategy determines fit. DSCR borrowers hold properties and collect rent. Hard money borrowers renovate and refinance or sell within a year.
Choose DSCR if you're buying turnkey rentals or stabilized properties generating immediate cash flow. It works when you have time to close and plan to hold long-term.
Pick hard money when you're flipping distressed properties, facing seller deadlines, or need renovation capital bundled into the loan. It fits investors with clear 6-12 month exit plans.
Many Monterey Park investors use both strategically. Hard money to acquire and renovate, then refinance into DSCR once the property's rented and cash flowing.
No, DSCR requires rental income to qualify. Flips generate no cash flow during renovation. Hard money is built for flip financing.
DSCR requires 20-25% down on purchase price. Hard money needs 25-35% based on after-repair value, often less cash upfront.
Hard money handles any property type. DSCR lenders restrict non-warrantable condos. Check condo approval before applying for DSCR.
Yes, this is standard practice. Renovate with hard money, stabilize tenants, then refinance to DSCR for long-term hold.
DSCR permits cash-out refis after seasoning periods. Hard money is acquisition-focused, not designed for cash-out on owned properties.