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in Westminster, CA
Westminster investors have two popular non-QM financing options for rental properties and fix-and-flip projects. DSCR loans qualify you based on rental income, while hard money loans focus on property value.
Both loan types serve different investment strategies in Orange County's competitive market. Understanding the key differences helps you choose the best financing for your goals.
DSCR loans qualify investors based on a rental property's income rather than personal income. The debt service coverage ratio compares monthly rent to the mortgage payment.
These loans work well for buy-and-hold investors in Westminster who want long-term financing. You can skip tax returns and W-2s if the property generates enough rental income.
Terms typically range from 15 to 30 years with fixed rates. Rates vary by borrower profile and market conditions, making DSCR loans similar to traditional mortgages.
Hard money loans are asset-based short-term loans primarily used for property acquisition and renovation projects. Lenders focus on the property's current and after-repair value rather than your income.
These loans close quickly, often in days rather than weeks. Westminster investors use them for fix-and-flip projects or when traditional financing isn't available.
Terms usually run 6 to 24 months with higher interest rates. Rates vary by borrower profile and market conditions, but expect to pay more for speed and flexibility.
The biggest difference is loan duration and purpose. DSCR loans offer long-term financing for rental properties, while hard money provides short-term capital for flips.
Qualification criteria also differ significantly. DSCR lenders evaluate rental income ratios, while hard money lenders focus on property equity and exit strategy.
Costs vary between the two options. Hard money loans have higher rates but faster access to funds. DSCR loans cost less monthly but require longer commitment.
Choose DSCR loans if you're buying Westminster rental properties to hold long-term. They work best when monthly rent covers the mortgage payment and you want stable financing.
Hard money loans suit investors flipping properties or needing fast funding in Orange County. Use them when time matters more than cost or traditional loans won't work.
Some investors use both strategically. Start with hard money for acquisition and renovation, then refinance into a DSCR loan for long-term rental income.
DSCR loans are designed for rental properties, not flips. They require rental income for qualification. Hard money loans are better suited for renovation projects.
DSCR loans typically have lower rates since they're long-term products. Hard money loans cost more but offer speed and flexibility. Rates vary by borrower profile and market conditions.
DSCR loans usually require credit scores of 620 or higher. Hard money lenders are more flexible with credit since they focus on property value and equity.
Hard money loans can close in 7-14 days. DSCR loans take 3-4 weeks, similar to traditional mortgages. Speed depends on documentation and property appraisal.
Yes, this is a common strategy. Complete your renovation with hard money, then refinance into a DSCR loan for long-term rental income. This maximizes both speed and cost efficiency.