Loading
in Lodi, CA
Lodi investors face a choice between two non-QM financing paths that ignore W-2 income. DSCR loans reward properties that cash flow, while hard money bets on your exit strategy.
Both work for properties traditional lenders reject. The right choice depends on whether you're buying a rental or flipping a rehab project in San Joaquin County.
DSCR loans qualify you based on the property's rental income divided by its debt payments. If the ratio hits 1.0 or higher, the property pays for itself and you're likely approved.
These are 30-year mortgages with rates typically 1-2% above conventional. You need 20-25% down and decent credit (usually 660+), but your tax returns don't matter.
Best for investors buying turnkey rentals or stable properties in Lodi's residential neighborhoods. The property becomes its own underwriter.
Hard money lenders fund based on property value and your experience, not income or credit scores. They'll lend 65-75% of purchase price or after-repair value, whichever is lower.
Rates run 9-14% with 2-4 points upfront. Terms last 6-24 months because these loans finance acquisition and renovation, not long-term holds.
Speed matters here—approvals in days, funding in a week. Lodi fix-and-flip investors use hard money when the deal won't wait for traditional underwriting.
DSCR loans cost less per month but need rental income documentation and stronger credit. Hard money costs more but funds distressed properties DSCR lenders won't touch.
Timeline separates them clearly. DSCR suits buy-and-hold investors building rental portfolios. Hard money fits flippers who'll sell or refinance within a year.
Down payment structures differ too. DSCR requires 20-25% of purchase price. Hard money might need 30% down but bases that on after-repair value, creating built-in equity.
Choose DSCR if you're buying a rental property that's already habitable and generates market-rate rent. The property must support its own debt immediately or within lease-up period.
Pick hard money for properties needing significant work, foreclosure purchases, or any deal requiring speed. Also use it when your credit sits below 660 or the property can't produce rental income yet.
Many Lodi investors use both strategically—hard money for acquisition and rehab, then refinance into a DSCR loan once the property stabilizes and produces rental income.
Not typically. DSCR lenders need current rental income or immediate rent-ready condition. Use hard money for renovations, then refinance to DSCR once rented.
Hard money closes in 5-10 days. DSCR loans take 3-4 weeks because lenders analyze rent comps and property cash flow thoroughly.
Yes. Neither requires you to live in California. Hard money cares about the asset, DSCR cares about rental income regardless of borrower location.
DSCR typically requires 660+ credit. Hard money lenders may approve borrowers below 600 if the deal and equity position are strong.
DSCR loans often allow prepayment after 2-3 years. Hard money usually has no penalty since most borrowers exit within 12 months anyway.