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in Madera, CA
Madera investors face a choice between two asset-based financing paths. DSCR loans use rental income to qualify you, while hard money lenders focus on property value and speed.
Both skip traditional income verification. But they serve completely different investment strategies and timelines in Madera's rental and fix-flip markets.
DSCR loans qualify you based on whether the property's rent covers its mortgage payment. Lenders want a ratio above 1.0, meaning rent exceeds the monthly debt service.
You'll get 30-year terms at rates typically 1-2% above conventional loans. Minimum credit score is usually 620, with 20-25% down on investment properties.
These work for Madera landlords building rental portfolios. Close in 3-4 weeks, keep the property long-term, and refinance later if needed.
Hard money loans fund fast based on property value alone. Most lenders care only about the asset and your exit strategy, not credit scores or rental income.
Expect 8-12% rates with 2-4 points upfront. Terms run 6-24 months, and you'll need a clear plan to pay it off through sale or refinance.
These suit Madera fix-and-flip investors who need to close in 7-10 days. You're paying premium rates for speed and flexibility on distressed properties.
DSCR loans cost 6-8% with lower fees and long terms. Hard money hits 8-12% with significant points but closes in days instead of weeks.
DSCR requires the property to generate rent that covers the payment. Hard money doesn't care about cash flow, just equity and your flip timeline.
Credit matters for DSCR programs. Hard money lenders will work with borrowers under 600 or even no score if the deal makes sense and you have experience.
Use DSCR if you're buying a Madera rental to hold long-term. The property needs to be rent-ready or close to it, and you want manageable monthly payments.
Choose hard money when you're flipping, the property needs heavy work, or you lost out on deals because you couldn't close fast enough. You'll refinance or sell within a year.
Don't use hard money for a buy-and-hold unless you have a clear refinance path within 12 months. The rates will kill your cash flow on extended holds.
No, DSCR loans require rental income to qualify. The property needs a tenant or be rent-ready at closing, which doesn't work for flip projects.
Most hard money lenders fund 70-80% of purchase price or after-repair value. You'll need 20-30% down plus rehab budget if applicable.
DSCR loans have standard closing costs around 2-3%. Hard money adds 2-4 points upfront, making it significantly more expensive at closing.
Yes, this is a common strategy. Complete your rehab, get a tenant in place, then refinance to DSCR for long-term cash flow.
Yes, but hard money often uses broker price opinions for speed. DSCR loans require full appraisals and rent schedule analysis.
DSCR if there are comparable rentals to establish market rent. Hard money is more flexible on unique properties with limited comps.