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in Norwalk, CA
Norwalk investors have two main options when personal income won't qualify them for traditional financing. DSCR loans work for long-term rental holds, while hard money fits quick flips and rehabs.
Both skip W-2 income verification, but they serve completely different investment timelines. Picking the wrong one costs you thousands in unnecessary interest or kills your deal altogether.
DSCR loans qualify you based on the property's rental income divided by the mortgage payment. Most lenders want a ratio of 1.0 or higher, meaning rent covers the full payment.
Terms run 30 years with rates typically 1-2% above conventional loans. You need 20-25% down and a 620+ credit score in most cases.
These work for investors buying Norwalk rentals to hold long-term. The property's income is your qualification, not your tax returns or pay stubs.
Hard money lenders fund based on the property's after-repair value, not your income or credit. They'll lend 65-75% of ARV on Norwalk fix-and-flip projects.
Terms run 6-24 months with rates between 9-14% plus 2-4 points upfront. The high cost only makes sense if you're selling or refinancing fast.
Credit matters less here—some lenders approve borrowers with scores in the 500s. Speed is the selling point: closings happen in 7-14 days versus 30-45 for DSCR loans.
DSCR loans cost less but take longer to close and require the property to cash flow from day one. Hard money ignores cash flow but charges 3-4x more in interest annually.
DSCR lenders want seasoned investors with good credit. Hard money lenders care about your exit strategy and the property's equity potential, not your FICO score.
The timeline is everything: DSCR works when you're holding for years and need the lowest possible payment. Hard money works when you need cash this week to grab a deal before someone else does.
Choose DSCR if you're buying a Norwalk rental to hold past year one. The lower rate saves you hundreds monthly compared to hard money, and 30-year terms keep payments manageable.
Pick hard money if you're flipping or need to close before another buyer beats you to the property. The speed and minimal qualification requirements justify the cost on short-term projects.
Most Norwalk investors use hard money to acquire and renovate, then refinance into a DSCR loan once the property is stabilized and rented. That strategy gets you speed upfront and low rates long-term.
Yes, but you'll pay 9-14% interest versus 7-9% for DSCR. Hard money makes sense only if you need to close in under two weeks or can't qualify for DSCR yet.
Not really. DSCR lenders require the property to be rent-ready at closing. Hard money is built for renovation projects with draws released as work completes.
Hard money. Most DSCR lenders want 620+ credit, while hard money lenders approve borrowers in the 500s if the deal has enough equity.
Yes, and many Norwalk investors do exactly this. You use hard money to acquire and renovate, then refi to DSCR once the property is rented and stabilized.
DSCR loans need 20-25% down. Hard money lenders typically fund 65-75% of after-repair value, so your down payment depends on purchase price and renovation costs.