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in Norco, CA
Norco investors have two powerful financing options for rental properties and fix-and-flip projects. DSCR loans use rental income to qualify, while hard money loans focus on the property's value.
Both are non-QM loans that don't require W-2 income verification. Each serves different investment strategies in Riverside County's real estate market. Understanding the differences helps you choose the right tool 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 long-term rental properties in Norco. They offer longer terms than hard money and don't require proof of employment. Rates vary by borrower profile and market conditions.
Hard money loans are asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects. Lenders focus on the property's current and future value, not your income.
These loans fund quickly, often in days rather than weeks. They're perfect for fix-and-flip projects or properties needing major repairs in Norco. Rates vary by borrower profile and market conditions, with shorter repayment periods.
Loan terms separate these two options significantly. DSCR loans typically run 15 to 30 years, while hard money loans last 6 to 24 months. This makes DSCR suited for rentals and hard money for quick turnarounds.
Approval criteria differ substantially between the two. DSCR loans require the property to generate enough rent to cover payments. Hard money lenders care most about the property's value and your exit strategy.
Interest rates and costs vary considerably. Hard money loans typically have higher rates but shorter terms. DSCR loans offer lower rates for longer periods, making monthly payments more predictable for Riverside County investors.
Choose DSCR loans if you're buying rental property in Norco to hold long-term. They work when the property generates steady rental income. You'll benefit from lower rates and predictable monthly payments over many years.
Pick hard money loans for fix-and-flip projects or properties needing major work. These loans close fast when you need to act quickly on opportunities. They're ideal when you plan to renovate and sell within a year.
Your investment timeline matters most. Long-term rentals fit DSCR financing, while quick flips need hard money. Some Riverside County investors use both: hard money to buy and renovate, then refinance into a DSCR loan to hold.
Yes, many Norco investors use hard money to buy and renovate a property, then refinance into a DSCR loan once it's rented. This strategy combines the speed of hard money with the stability of DSCR financing.
Hard money loans are typically easier since they focus mainly on property value. DSCR loans require the property to generate sufficient rental income to cover mortgage payments, adding an income requirement.
Hard money loans can close in 5-10 days for urgent deals. DSCR loans typically take 3-4 weeks to close, similar to conventional mortgages but faster than traditional investment property loans.
Neither requires perfect credit. Hard money lenders may accept lower scores since they focus on property value. DSCR lenders typically want mid-600s or higher, but exceptions exist based on the deal.
DSCR loans generally have lower interest rates and fees over time. Hard money costs more but only for short periods. Your total cost depends on how long you keep the loan and your exit strategy.