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in San Bernardino, CA
San Bernardino investors have two powerful financing tools for rental properties. DSCR loans use property income for qualification, while hard money loans focus on asset value.
Both options skip traditional income verification. Your choice depends on your timeline, property condition, and investment goals. Understanding each loan type helps you move forward with confidence.
DSCR loans qualify investors based on rental property income, not personal earnings. The debt service coverage ratio compares monthly rent to mortgage payments. A ratio above 1.0 means the property covers its own costs.
These loans work well for stabilized rental properties generating consistent income. Terms typically range from 15 to 30 years with competitive rates. Investors building long-term portfolios prefer this financing structure.
Hard money loans are short-term, asset-based financing for real estate investors. Lenders focus on property value and equity rather than borrower income. These loans fund quickly, often closing in days instead of weeks.
Investors use hard money for fix-and-flip projects, property acquisitions, and renovations. Terms usually run 6 to 24 months with higher interest rates. Speed and flexibility make these loans valuable for time-sensitive deals.
The biggest difference is loan duration and purpose. DSCR loans offer long-term financing for income-producing rentals. Hard money provides quick, short-term capital for acquisitions and rehabs.
Approval criteria also differ significantly. DSCR lenders evaluate rental income and property cash flow. Hard money lenders prioritize property value and exit strategy. Interest rates and fees are typically higher for hard money loans.
Closing timelines vary dramatically between these options. Hard money can close in 3-7 days for urgent deals. DSCR loans take 2-4 weeks but offer better long-term rates.
Choose DSCR loans when buying stabilized rental properties you plan to hold. These loans make sense for building a long-term portfolio. The property must generate enough rent to cover mortgage payments.
Hard money fits fix-and-flip projects and properties needing major repairs. Use it when speed matters or traditional financing won't work. Plan your exit strategy before committing to short-term terms.
Many San Bernardino investors use both loan types strategically. Start with hard money to acquire and renovate. Then refinance into a DSCR loan once the property is rent-ready.
DSCR loans require properties to be rent-ready and generating income. For major repairs, start with hard money, complete renovations, then refinance to DSCR once stabilized.
DSCR loans typically offer lower rates for long-term financing. Hard money rates are higher due to short terms and faster funding. Rates vary by borrower profile and market conditions.
Both require decent credit, though standards are more flexible than conventional loans. DSCR lenders typically want 620+ credit scores. Hard money lenders may accept lower scores with more equity.
DSCR loans typically require 20-25% down payment. Hard money lenders usually want 25-35% down or equity. Exact requirements depend on property type and borrower experience.
Yes, this is a common strategy in San Bernardino. Complete your rehab with hard money, stabilize the rental, then refinance to a DSCR loan for better long-term rates.