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in Fillmore, CA
Fillmore real estate investors have two popular financing options: DSCR loans and hard money loans. Both are non-QM products designed for investment properties, not primary residences.
DSCR loans focus on rental income while hard money loans prioritize the property's value. Understanding the differences helps you choose the right financing for your Ventura County investment.
Each loan type serves different investment strategies and timelines. Your choice depends on your project goals, timeline, and financial situation.
DSCR loans qualify investors based on a rental property's income rather than personal income. The lender calculates the debt service coverage ratio by dividing monthly rent by monthly mortgage payment.
These loans typically offer longer terms, often 30 years. Rates vary by borrower profile and market conditions, making them suitable for buy-and-hold investors.
DSCR financing works well for stabilized rental properties in Fillmore. You don't need to show W-2s or tax returns, just proof of rental income.
Hard money loans are asset-based short-term loans primarily used for property acquisition and renovation projects. Lenders focus on the property's current and after-repair value, not your income.
These loans close quickly, often within days or weeks. Terms typically range from 6 to 24 months with higher interest rates.
Hard money financing is ideal for fix-and-flip projects in Fillmore. Rates vary by borrower profile and market conditions, but expect higher costs for speed and flexibility.
The biggest difference is loan purpose and timeline. DSCR loans suit long-term rental investments while hard money loans fit short-term flips and renovations.
Approval criteria differ significantly. DSCR lenders analyze rental income and debt coverage ratios. Hard money lenders focus on property value and equity position.
Cost structures vary widely. DSCR loans generally have lower rates but require more documentation. Hard money loans cost more but close faster with less paperwork.
Exit strategies also differ. DSCR borrowers hold properties long-term for cash flow. Hard money borrowers plan to sell or refinance within months.
Choose DSCR loans if you're buying rental properties in Fillmore for steady cash flow. These work best when you plan to hold the property for years.
Pick hard money loans for quick acquisitions or renovation projects. They're ideal when you need fast funding or plan to sell within 12-24 months.
Consider your exit strategy carefully. If refinancing to a DSCR loan after repairs, hard money makes sense initially. If buying turnkey rentals, go straight to DSCR.
Work with a Ventura County broker who understands both products. They can help structure the right financing for your Fillmore investment goals.
DSCR loans work best for stabilized rental properties. For fix-and-flip projects, hard money loans are more suitable due to their short terms and faster closing.
DSCR loans typically have lower rates than hard money loans. Rates vary by borrower profile and market conditions, but hard money costs more for speed and flexibility.
Hard money loans close in days to weeks. DSCR loans take longer, usually 3-4 weeks, due to more thorough income analysis and documentation requirements.
Both programs are more flexible than conventional loans. DSCR loans prefer higher scores, while hard money focuses on property value and equity over credit.
Yes, this is a common strategy. Investors use hard money to acquire and renovate, then refinance to a DSCR loan once the property is rented and stabilized.