Loading
in Redlands, CA
Redlands investors have two popular non-QM financing options for rental properties. DSCR loans use property income to qualify, while hard money loans focus on asset value.
Both loan types skip traditional income verification. They serve different investment strategies in San Bernardino County's real estate market. Understanding the differences helps you choose the best fit.
DSCR loans qualify you based on rental income from the property itself. Your Debt Service Coverage Ratio compares monthly rent to the mortgage payment. A ratio above 1.0 means the property generates enough income to cover its debt.
These loans work well for buy-and-hold investors in Redlands. Terms typically extend 15 to 30 years with competitive rates. Rates vary by borrower profile and market conditions.
Hard money loans are short-term financing backed by the property's value. Lenders focus on the asset rather than your credit or income. These loans close quickly, often within days or weeks.
Fix-and-flip investors and those needing fast funding prefer hard money loans. Terms usually range from 6 to 24 months. Rates vary by borrower profile and market conditions, but are typically higher than conventional loans.
The timeline separates these two loan types most clearly. DSCR loans take 3-4 weeks to close and last decades. Hard money loans close in days but must be repaid or refinanced within months.
Cost structures differ significantly between the options. DSCR loans have lower interest rates for long-term holding. Hard money loans charge higher rates plus origination fees, reflecting their speed and convenience.
Your investment strategy determines which loan makes sense. DSCR loans suit properties already generating rental income. Hard money loans work for acquisitions, renovations, or situations requiring immediate funding.
Choose DSCR loans when buying stabilized rentals in Redlands for long-term holds. You need a property with existing or projected rental income. This option provides affordable financing you can keep for years.
Pick hard money loans for time-sensitive deals or properties needing work. Examples include foreclosures, fix-and-flips, or competitive bidding situations. The speed and flexibility justify the higher costs for short-term projects.
Many San Bernardino County investors use both loan types strategically. Start with hard money to acquire and renovate. Then refinance into a DSCR loan for long-term rental income.
DSCR loans work best for rent-ready properties. Most lenders require the property to generate income immediately. Consider hard money first for renovations, then refinance to DSCR.
DSCR loans typically offer lower rates than hard money loans. Hard money rates are higher due to shorter terms and faster approval. 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. Each lender has different requirements.
Hard money loans can close in as little as 5-10 days. DSCR loans typically take 3-4 weeks to close. Your timeline needs should guide your choice.
Yes, many investors refinance from hard money to DSCR loans. Complete your renovations and establish rental income first. Then apply for DSCR financing for better long-term rates.