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in West Covina, CA
West Covina investors face a choice between two non-QM loan types that work completely differently. DSCR loans focus on rental income and suit long-term holds, while hard money loans prioritize speed and equity for quick flips.
Both skip traditional income verification, but that's where the similarities end. Your timeline, property condition, and exit strategy determine which loan makes sense for your West Covina deal.
DSCR loans qualify you based on one number: monthly rent divided by monthly mortgage payment. If that ratio hits 1.0 or higher, you're in the game regardless of your W-2 income or tax returns.
These are 30-year loans with rates typically 1-2% above conventional. You can finance up to 80% LTV on purchases, and the property must be rent-ready or already occupied. Think stabilized rental properties, not major rehabs.
Closing takes 20-30 days in West Covina. Lenders want 12-24 months reserves and credit scores around 660-680 minimum. You're building a rental portfolio for cash flow, not racing to close in a week.
Hard money loans fund based on the property's after-repair value, not your financials. Lenders lend 65-75% of ARV, which means you need cash or equity to close the gap.
These are 12-month bridge loans with rates from 9-14% plus 2-4 points upfront. You're paying for speed and flexibility — closings happen in 5-10 days when you need to beat cash offers on West Covina fixer-uppers.
Hard money works for properties that can't get traditional financing yet. Distressed homes, major renovations, or deals requiring fast closes. You refinance out within a year or sell the property after repairs.
The cost gap is massive. DSCR loans run 7-9% with minimal points. Hard money hits 9-14% plus 2-4 points upfront, plus you're refinancing within a year. That's $30,000+ more on a $400,000 loan if you hold hard money for 12 months.
Property condition determines eligibility. DSCR lenders won't touch a property that needs $50,000 in foundation work. Hard money lenders expect that — they're lending on what the property will be worth, not its current state.
Timeline and exit strategy split them completely. DSCR is for buy-and-hold investors building rental income. Hard money is for fix-and-flip operators or bridge financing until you can refinance into permanent debt.
Choose DSCR when you're buying a property you plan to rent for years. The numbers work at 1.0 DSCR or better, you're not racing against a deadline, and the property is habitable. You want a real mortgage, not a bridge loan.
Choose hard money when speed matters more than cost. You're flipping a West Covina property in 6-9 months, the home needs serious work, or you're competing against cash buyers and need to close in a week. You have a clear exit strategy and capital to cover the higher costs.
Some investors use both: hard money to acquire and renovate, then refinance into a DSCR loan for long-term rental income. That strategy works when the numbers support both phases and you've got reserves to bridge the gap.
Minor cosmetic work is fine, but the property must be rentable as-is. If it needs permits, major systems work, or can't pass occupancy standards, you'll need hard money first.
Expect to bring 25-35% of the purchase price plus renovation costs. If ARV is $500k and you're buying at $350k needing $50k in work, you'll need roughly $140k cash to close.
Most lenders want 1.0 or higher, though some go to 0.75 with larger down payments. Below 1.0 means rent doesn't cover the mortgage payment.
Yes, once renovations are complete and the property is rented. You'll need 6-12 months of seasoning depending on the DSCR lender's requirements.
Hard money wins at 5-10 days versus 20-30 for DSCR. When you're competing against cash offers on a fixer-upper, hard money matches their speed.