Loading
in South Gate, CA
South Gate investors face a choice: DSCR loans for rental cash flow or hard money for quick flips. Both skip W-2 income verification, but they serve completely different strategies.
DSCR loans work for buy-and-hold plays where rents cover the mortgage. Hard money funds fast acquisitions and rehabs when you need to close in days, not weeks.
DSCR loans approve based on rental income divided by the mortgage payment. Most lenders want a ratio of 1.0 or higher, meaning rent equals or exceeds the monthly debt.
Terms run 30 years like conventional loans. Rates sit 1-2% above agency pricing. You hold the property and collect rent while the loan seasons.
These work for stable rental markets where cash flow matters more than exit speed. No tax returns, no job verification—just property income and decent credit.
Hard money lends against property value, not income. Approval happens in days based on your equity position and exit strategy.
Terms run 6-24 months with interest-only payments. Rates start around 8-12%, and lenders charge 2-4 points upfront. You refinance or sell before the balloon payment hits.
This is bridge financing for acquisitions, rehabs, or distressed properties that won't qualify for traditional loans. Speed and flexibility cost more than patience.
DSCR loans hold properties. Hard money flips them. That's the core split—one finances cash flow, the other finances speed.
DSCR needs rent rolls and appraisals showing income potential. Hard money needs an as-is value and your plan to add value or refinance out.
Cost differs dramatically. DSCR runs like a conventional loan with slightly higher rates. Hard money doubles your rate and adds points because you're paying for urgency and risk tolerance.
Use DSCR when you're buying a rental property you plan to hold for years. The property cash flows, you want long-term fixed financing, and you can wait 30-45 days to close.
Use hard money when you need to close fast on a flip, a distressed property, or a deal that won't qualify anywhere else. You have a clear exit in under two years.
South Gate investors often start with hard money to acquire and renovate, then refinance into DSCR once the property is rent-ready and stabilized. That's the cleanest path from acquisition to long-term hold.
No. DSCR loans require rental income and long-term cash flow. Hard money fits flips because it expects a short-term exit through sale or refinance.
Hard money closes in 3-10 days. DSCR loans take 30-45 days due to income verification and full appraisals.
DSCR typically needs 620+ credit. Hard money lenders care more about equity and exit strategy than your score.
Yes. That's a common strategy—use hard money to acquire and stabilize, then refi into DSCR for long-term financing once rent is in place.
DSCR has lower payments due to 30-year amortization. Hard money uses interest-only but at higher rates, so payments vary by loan size.