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in Fontana, CA
Fontana real estate investors have two powerful financing options: DSCR loans and hard money loans. Both are non-QM products designed for investment properties, not traditional home purchases.
DSCR loans qualify you based on rental income, not your personal earnings. Hard money loans focus on the property's value and fund deals quickly. Your investment strategy determines which option serves you best.
Understanding how these loans work helps you choose the right financing. Rates vary by borrower profile and market conditions, so comparing terms is essential.
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. A ratio above 1.0 means the rent covers the loan.
These loans work well for buy-and-hold investors in Fontana. They offer longer terms, typically 30 years, with more competitive rates than hard money. You don't need to verify employment or show tax returns.
DSCR loans require the property to generate income from day one. Closing takes 3-4 weeks on average. They're ideal when you're building a rental portfolio in San Bernardino County.
Hard money loans are asset-based short-term loans primarily used for property acquisition and renovation projects. Lenders focus on the property's current or after-repair value, not your income. These loans fund quickly, often in 7-14 days.
Terms typically run 6-24 months, making them perfect for fix-and-flip projects in Fontana. Interest rates are higher than DSCR loans because of the short timeline and flexibility. Many investors use hard money to acquire properties, then refinance into DSCR loans.
Hard money works for properties needing major repairs that won't qualify for traditional financing. The loan amount is based on a percentage of the property's value. Rates vary by borrower profile and market conditions.
The main difference is timeline and purpose. DSCR loans are long-term financing for rental properties that already generate income. Hard money loans are short-term bridge financing for acquisitions and renovations.
Cost structure varies significantly between the two. DSCR loans have lower interest rates but require the property to produce rental income. Hard money loans cost more but work for properties in any condition.
Qualification criteria differ completely. DSCR lenders evaluate the property's rental income and your credit. Hard money lenders focus primarily on the property's value and your exit strategy. Both serve Fontana investors but for different scenarios.
Choose DSCR loans when buying a turnkey rental or refinancing an existing Fontana investment property. They offer better rates and terms for properties that already generate income. This option suits buy-and-hold investors building wealth through cash flow.
Choose hard money when speed matters or the property needs work. If you're flipping homes in San Bernardino County, hard money gets you funded fast. It's also ideal when a property won't qualify for traditional financing due to condition.
Many successful investors use both loan types strategically. They acquire and renovate with hard money, then refinance into DSCR loans for long-term holds. Your specific project timeline and goals should guide your decision.
DSCR loans aren't ideal for flips because they're long-term products. They work best for rental properties generating immediate income. Use hard money for flips instead.
DSCR loans typically have lower rates than hard money loans. Hard money costs more due to shorter terms and higher risk. Rates vary by borrower profile and market conditions.
Hard money loans typically fund in 7-14 days. DSCR loans take 3-4 weeks on average. Choose based on how quickly you need to close your Fontana deal.
Both loan types consider credit, but standards vary. DSCR loans typically require higher credit scores. Hard money lenders may be more flexible if the deal is strong.
Yes, this is a common strategy. Investors use hard money to acquire and renovate, then refinance to DSCR loans once the property generates rental income.