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in San Clemente, CA
San Clemente real estate investors have two popular financing paths: DSCR loans and hard money loans. Both are non-QM options that don't rely on traditional income verification. Each serves different investment strategies and timelines.
DSCR loans focus on rental property cash flow for long-term holds. Hard money loans prioritize the property's value for short-term projects. Understanding these differences helps you choose the right tool for your investment.
DSCR loans qualify investors based on rental property income rather than personal income. The debt service coverage ratio measures if rent covers the mortgage payment. Rates vary by borrower profile and market conditions.
These loans work well for long-term rental property investments in San Clemente. You can secure 30-year terms with competitive rates. No tax returns or employment verification needed if the property generates sufficient rental income.
Hard money loans are short-term, asset-based financing primarily used for acquisitions and renovations. Lenders focus on the property's current and after-repair value. Rates vary by borrower profile and market conditions.
These loans close quickly, often in days rather than weeks. They're perfect for fix-and-flip projects or properties needing significant repairs. Terms typically run 6 to 24 months with higher interest rates than traditional financing.
The main difference lies in timeline and purpose. DSCR loans suit investors holding rental properties long-term. Hard money suits investors flipping properties or needing fast capital. Rates and terms reflect these different use cases.
DSCR loans require stable rental income and longer approval times. Hard money loans require strong equity positions and close rapidly. DSCR offers lower rates for extended periods. Hard money trades higher costs for speed and flexibility.
Choose DSCR loans if you're buying rental properties to hold long-term in San Clemente. They offer better rates and terms for stable cash-flowing investments. You'll need a property that generates sufficient rental income.
Choose hard money if you're flipping properties or need fast financing. These loans work when properties need repairs or traditional financing won't approve. They're also ideal when timing matters more than cost for your investment strategy.
Yes, many investors use hard money to acquire and renovate a property, then refinance into a DSCR loan. This strategy lets you move fast initially, then secure better long-term rates.
Hard money loans typically have easier qualification since they focus mainly on property value. DSCR loans require stable rental income that meets minimum coverage ratios, usually 1.0 or higher.
No, both DSCR and hard money loans are investment property financing only. They're designed for rental properties, fix-and-flip projects, and other income-producing real estate.
DSCR loans typically require 20-25% down for long-term financing. Hard money loans often need 25-35% down, though this varies based on the property and your experience level.
DSCR loans have lower interest rates and costs for long-term holds. Hard money has higher rates but shorter terms. Total cost depends on your investment timeline and strategy.