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in Fullerton, CA
Fullerton investors have two powerful financing options for rental properties and fix-and-flip projects. DSCR loans and hard money loans serve different needs in Orange County's competitive real estate market.
Both are non-QM products that don't rely on W-2 income or tax returns. Understanding the differences helps you choose the right tool for your investment goals.
Your timeline, property condition, and investment strategy determine which loan works best. Each option has unique advantages for Fullerton real estate investors.
DSCR loans qualify investors based on rental property income rather than personal income. The property's rent must cover the mortgage payment to meet lender requirements.
These loans work well for buy-and-hold investors in Fullerton seeking long-term financing. Terms typically range from 15 to 30 years with competitive rates.
You need a property that's already rented or ready to rent immediately. The debt service coverage ratio compares monthly rent to monthly mortgage payment. Rates vary by borrower profile and market conditions.
Hard money loans are asset-based short-term loans primarily used for property acquisition and renovation projects. Lenders focus on the property's after-repair value rather than your income.
These loans close quickly, often within days, making them ideal for competitive situations. Terms usually run 6 to 24 months with higher interest rates.
Fullerton investors use hard money for fix-and-flip projects and properties needing major repairs. The speed and flexibility come at a higher cost. Rates vary by borrower profile and market conditions.
Timeline separates these options dramatically. DSCR loans take 21-45 days to close while hard money can fund in days. Your urgency determines which fits better.
Cost structures differ significantly between the two products. Hard money features higher rates and points but shorter terms. DSCR loans offer lower rates for longer periods.
Property condition matters greatly for loan selection. DSCR requires rent-ready properties while hard money finances distressed properties. Your investment strategy should guide your choice.
Choose DSCR loans when buying stabilized rental properties in Fullerton for long-term cash flow. These work best when you have time to close and want lower payments.
Select hard money when speed matters or the property needs extensive repairs. Fix-and-flip investors and those buying at auction benefit most from this option.
Your investment timeline is the key factor in this decision. Short-term projects need hard money while buy-and-hold strategies fit DSCR loans. Consider your exit strategy before choosing.
DSCR loans require rental income, making them unsuitable for flips. They work for properties already generating rent. Hard money is the better choice for renovation projects.
Hard money loans close much faster, often in 5-10 days. DSCR loans typically take 21-45 days to fund. Speed comes at a higher cost with hard money.
Hard money focuses primarily on property value with flexible credit requirements. DSCR loans generally prefer credit scores above 620. Each lender sets specific requirements.
Yes, this is a common strategy for Fullerton investors. Complete renovations, establish rental income, then refinance to lower rates. This maximizes your investment returns.
Both typically require 15-25% down payment minimums. Hard money may go higher based on property condition. Your experience and project details affect requirements.