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in Palmdale, CA
Palmdale investors need financing that matches their strategy. DSCR loans work for long-term rentals with steady cash flow. Hard money fits fix-and-flip projects or properties needing major rehab before they can rent.
Both are non-QM loans that ignore your W-2 income. Your credit and the property's potential determine approval. The right choice depends on your timeline and what you're buying.
DSCR loans qualify you based on rental income divided by the mortgage payment. You need a ratio above 1.0, meaning rent covers the loan. Terms run 30 years with rates typically 1-2% above conventional.
You can close in 2-3 weeks with 20-25% down. Credit minimums start at 620 for most lenders. This works for investors building a rental portfolio who want predictable long-term financing.
Hard money loans fund based on property value, not income or credit. You can close in 7-14 days with rates from 9-14%. Terms run 6-24 months. Lenders advance 65-75% of purchase price or after-repair value.
These loans cost more but move fast. You pay points upfront, often 2-4% of the loan amount. Use them when speed matters or the property won't qualify for traditional financing until renovations are done.
Timeline separates these loans. DSCR takes 2-3 weeks and carries lower rates. Hard money closes in under two weeks but costs significantly more. DSCR needs a property that cash flows today. Hard money funds properties that need work first.
Cost structure differs completely. DSCR has conventional-style payments over 30 years. Hard money requires interest-only payments with a balloon due at maturity. Exit strategy matters: DSCR becomes permanent financing while hard money forces a refinance or sale.
Choose DSCR for turnkey rentals or properties needing minor cosmetics. It costs less and you keep it long-term. The property must generate enough rent to cover the mortgage from day one.
Pick hard money for fix-and-flips or properties that won't appraise until renovated. Speed and flexibility justify the higher cost when you're competing with cash buyers or executing a quick turnaround. Refinance into DSCR once the property stabilizes and rents.
Yes, this is a common strategy. Use hard money to buy and renovate, then refinance to DSCR once the property rents and stabilizes.
DSCR loans have significantly lower rates, typically 1-2% above conventional. Hard money runs 9-14% due to the short-term, higher-risk nature.
Yes, both require appraisals. DSCR focuses on current value and rental income. Hard money often uses after-repair value for fix-and-flip deals.
Hard money cares less about credit, focusing on the deal itself. DSCR typically requires 620+ credit though some lenders go lower.
Hard money closes in 7-14 days. DSCR takes 2-3 weeks, faster than conventional but slower than hard money.