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in Murrieta, CA
Murrieta investors have two strong financing options for rental properties. DSCR loans and hard money loans each serve different investment strategies and timelines.
DSCR loans focus on rental income for qualification. Hard money loans prioritize the property's value and speed. Your choice depends on your project type and goals.
Both are non-QM loans designed for real estate investors. Neither requires traditional income verification like W-2s or tax returns.
DSCR loans qualify you based on your rental property's income, not your personal earnings. The lender calculates the debt service coverage ratio by dividing monthly rent by the mortgage payment.
These loans typically offer longer terms, often 30 years. They work best for investors building a rental portfolio in Riverside County. Rates vary by borrower profile and market conditions.
You'll need the property to generate enough rent to cover the mortgage. Most lenders require a DSCR of at least 1.0, meaning rent equals or exceeds the payment.
Hard money loans are short-term financing based on the property's value. These asset-based loans fund quickly, often in days rather than weeks.
Investors use hard money for fix-and-flip projects and time-sensitive acquisitions in Murrieta. Terms typically run 6 to 24 months. Rates vary by borrower profile and market conditions.
The property itself serves as collateral. Lenders focus on after-repair value and your exit strategy, not your income or credit score.
The main difference is timeline and purpose. DSCR loans support long-term rental strategies with 30-year terms. Hard money fits short-term projects with quick exits.
DSCR loans generally have lower rates but take longer to close. Hard money closes fast but costs more due to higher rates and fees.
DSCR requires the property to cash flow from day one. Hard money doesn't need immediate income since you'll refinance or sell quickly.
Choose DSCR for buy-and-hold rental properties in Riverside County. Pick hard money when speed matters or the property needs significant work.
Choose a DSCR loan if you're buying a turnkey rental or a property that will rent immediately. It's perfect for building long-term wealth through Murrieta rental properties.
Hard money makes sense for properties needing renovation before they can rent or sell. It's also ideal when you need to close quickly to secure a deal.
Consider your exit strategy. If you plan to hold and rent for years, DSCR is your answer. If you'll flip or refinance within months, hard money works better.
Many investors use both loan types for different deals. The right choice depends on the specific property and your investment timeline.
Yes, both DSCR and hard money loans are available for investment properties throughout Murrieta and Riverside County. Local lenders understand the market well.
Hard money is typically easier since it's based mainly on property value. DSCR requires the property to generate sufficient rental income to cover payments.
Absolutely. Many investors use hard money to buy and renovate, then refinance to a DSCR loan once the property is rented and stabilized.
DSCR loans generally have lower rates and fees. Hard money costs more but provides speed and flexibility when you need it most.
DSCR typically requires credit scores around 620 or higher. Hard money lenders are more flexible with credit since they focus on the property's value.