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in Walnut, CA
Walnut investors typically face two paths when W-2 income won't work: DSCR loans or hard money. DSCR loans run like traditional mortgages but qualify on rental income. Hard money moves fast and cares only about property value.
Most Walnut deals need one or the other, rarely both. DSCR works for buy-and-hold rentals in stable neighborhoods. Hard money fits fix-and-flip projects or quick closings when sellers won't wait 30 days.
DSCR loans qualify you based on whether rent covers the mortgage payment. Lenders want a ratio above 1.0, meaning rental income exceeds debt service. Most approve 75-80% LTV with rates 1-2 points above conventional.
You'll close in 3-4 weeks with full appraisals and title work. These are long-term loans with 30-year terms. Your tax returns don't matter if the property cashflows enough to satisfy underwriting.
Hard money lenders approve on property value and exit strategy. They'll fund 65-75% of purchase price or ARV in 7-14 days. Rates run 9-14% with 2-4 points upfront. Most loans run 6-24 months, not years.
Credit matters less than equity and your plan to repay. You'll need a clear exit: refinance into DSCR, sell the property, or bring cash. Hard money works when speed beats cost and you know your next move.
Timeline separates these loans first. DSCR takes a month, hard money takes a week. Cost comes next: DSCR charges less interest but requires the property to cashflow. Hard money costs more but doesn't care about rent ratios.
Term length matters most for your strategy. DSCR gives you 30 years to hold and refinance later. Hard money forces action in under two years. One fits rental portfolios, the other fits active rehab projects.
Use DSCR when you're buying a rental property you plan to keep. The numbers work if monthly rent hits 1.25 times your total housing payment. You'll save thousands in interest over a 30-year hold compared to hard money.
Choose hard money for fix-and-flip deals or when you need to close fast. Sellers accepting cash offers won't wait a month. Projects requiring heavy renovation can't qualify for DSCR until rent-ready. Speed and flexibility cost more but sometimes win deals DSCR can't touch.
Yes, most investors do exactly that after renovations finish. You'll need 6-12 months of rental history and a 1.0+ DSCR to qualify for the refinance.
Hard money funds in 7-14 days with minimal documentation. DSCR loans take 30 days minimum with full appraisals and title work required.
DSCR requires full appraisals like conventional loans. Hard money lenders usually order BPOs or drive-by valuations, which move faster.
Not until it's rent-ready and cash-flowing. Lenders underwrite DSCR on actual or market rent, which requires habitable condition.
DSCR typically requires 660+ credit scores. Hard money lenders care less about credit, sometimes approving scores in the 500s if equity supports the loan.