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in Barstow, CA
Real estate investors in Barstow have two popular financing options. DSCR loans and hard money loans both serve investors but work very differently.
DSCR loans focus on rental income to qualify borrowers. Hard money loans emphasize property value and speed. Understanding these differences helps you choose the right financing for your Barstow investment.
Both are non-QM loans designed for investors. Neither requires traditional W-2 income verification. Your investment strategy determines which option fits best.
DSCR loans qualify you based on rental property income, not personal income. The debt service coverage ratio compares monthly rent to the mortgage payment.
These loans work well for buy-and-hold investors in Barstow. You can finance multiple properties without job verification. Terms typically range from 15 to 30 years with competitive rates.
DSCR loans require the property to generate enough rent to cover the mortgage. Lenders want a ratio above 1.0, meaning rent exceeds the payment. This makes them ideal for cash-flowing rental properties.
Hard money loans are short-term financing based on property value. These asset-based loans fund quickly, often in days rather than weeks. They're popular for fix-and-flip projects in Barstow.
Lenders focus on the property's current and after-repair value. Your credit and income matter less than the deal itself. Terms usually run 6 to 24 months with higher interest rates.
Speed is the main advantage of hard money loans. You can close fast and start renovations immediately. These loans work best when you need quick capital for time-sensitive opportunities.
The biggest difference is loan term length. DSCR loans offer 15 to 30 years while hard money maxes out around 24 months. Your investment timeline determines which makes sense.
Qualification criteria also differ significantly. DSCR loans require rental income that covers the payment. Hard money loans care most about property value and equity. Rates vary by borrower profile and market conditions.
Cost structures vary between these options. DSCR loans typically have lower rates but stricter property requirements. Hard money costs more but offers flexibility and speed for Barstow investors.
Choose DSCR loans if you're buying rental properties to hold long-term. They offer better rates and stable monthly payments. You need a property that generates solid rental income in Barstow.
Pick hard money loans for fix-and-flip projects or quick acquisitions. When speed matters more than cost, hard money delivers. These work well for distressed properties that need major repairs.
Many Barstow investors use both loan types strategically. Start with hard money to buy and renovate. Then refinance into a DSCR loan once the property is rent-ready and stabilized.
DSCR loans require the property to be rent-ready and generating income. For renovations, hard money is the better choice. Refinance to DSCR once repairs are complete.
DSCR loans typically offer lower rates than hard money. Rates vary by borrower profile and market conditions. Hard money costs more but provides speed and flexibility.
DSCR loans usually require 620+ credit scores. Hard money lenders are more flexible with credit. Both focus less on credit than traditional mortgages do.
Hard money loans can close in 5-10 days. DSCR loans take 3-4 weeks typically. Speed depends on your documentation and the property condition.
No, both are investment property loans only. DSCR and hard money loans are designed for rental properties and flips. You cannot use them for owner-occupied homes.