California Subprime Loans

Subprime mortgages (Non-QM loans) offer flexible financing for borrowers with credit challenges like bankruptcies or foreclosures. These loans help individuals access homeownership when traditional lenders say no.

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What Is a California Subprime (Non-QM) Mortgage?

A California subprime mortgage—also known as a non-QM loan or poor-credit home loan—is designed for borrowers who don’t meet prime credit or income standards. These loans use flexible documentation and alternative underwriting factors instead of rigid FICO thresholds and strict debt-to-income caps.

Recently Funded Deals in California

We’re proud of our fast funding and transparent approval process for California borrowers. Here are a few recently funded hard money loans in California:

Santa Rosa, California Hard Money Purchase Loan
Condominium

$330,000

San Francisco, California Hard Money Refinance Loan
Condominium

$150,000

San Diego, California Hard Money Refinance Loan
Condominium

$200,000

Riverside, California Hard Money Refinance Loan
Single Family Residence

$175,000

Santa Rosa, California Hard Money Refinance Loan
Single Family Residence

$375,000

Fresno, California Hard Money Refinance Loan
Single Family Residence

$425,000

Riverside, California Hard Money Blanket Refinance Loan
Industrial Condominiums

$600,000

San Francisco, California Hard Money Refinance Loan
Single Family Residence

$850,000

San Jose, California Hard Money Refinance Loan
Single Family Residence

$1,075,000

These success stories highlight our commitment to short closing times, flexible loan terms, and a streamlined loan process—wherever you are in Southern California or the Bay Area.

Comparison of Key Mortgage Types

There are different California loan programs available depending on your credit score, income, debt-to-income (DTI) ratio, and other factors. Certain types of mortgages are ideal for investors, while others are better suited for first-time homebuyers. Even if you meet the requirements for a certain type of loan, it’s important to explore other loan options to make sure you’re getting the best interest rates and loan terms.

In this section, we’ll compare some of the key mortgage types to help you determine which loan type is best for you.

Prime loans are available to people who meet strict requirements. A prime mortgage means you’re getting a low interest rate, which is why these mortgages are exclusively for low-risk borrowers. Here are the requirements you typically need to meet to secure a prime mortgage in California:

Credit score ≥ 680
Full W-2 income verification
DTI cap often 43%

FHA loans are backed by the Federal Housing Administration (FHA), allowing people who may not qualify for conventional loans to secure a mortgage. FHA loans typically come with lower down payments and closing costs, and it’s easier to get approved if you have a lower credit score. Here are the terms you can expect with an FHA loan:

Government-insured
Low down payment (3.5%)
Strict DTI and mortgage-insurance requirements

Hard money loans are popular among investors who need fast funding and approval to stay active in competitive real estate markets. Unlike other types of loans, hard money loans are backed by collateral. That means you don’t have to worry about meeting strict credit score and income requirements to get approved for a loan. This is what you can expect from a California hard money loan:

Underwritten on collateral value
High interest (8.99–13.99%)
Short terms (12–24 months)

Typical Use Cases:

First-time buyers denied by banks
Self-employed professionals using bank statements instead of W-2s
Real-estate investors needing fast bridge financing
Borrowers aiming to rebuild credit via second-chance financing

Understanding Subprime Mortgages and Loans

Source Capital is your trusted California subprime loan and poor credit mortgage lender. We offer creative loan solutions to borrowers who may not otherwise qualify for traditional mortgages and loans. If you’re looking for fast financing in California, we’re here for you.

At Source Capital, we exceed industry standards, consistently prioritizing client satisfaction, transparency, and responsiveness. Discover how Source Capital can help you achieve your financial goals.

Who Qualifies for California Subprime Loans?

California subprime loans are designed for borrowers with lower credit scores. If you don’t meet the requirements to secure a conventional loan, subprime loans can be an alternative option. Your eligibility for a California subprime loan depends on your credit history, income, loan purpose, and loan size.

Eligible Borrower Profiles

There are a few factors that may make you an eligible candidate for a subprime loan. Because subprime loans have fewer approval requirements, they’re ideal for borrowers who can’t get a traditional loan. Eligible borrower profiles include:

Individuals with a lower credit score—often lower than 660, but sometimes below 600. Recent bankruptcies, foreclosures, and short sales aren’t automatic disqualifiers.
Borrowers with non-traditional income. Income verification options include traditional W-2 and pay stubs, 1099 income assessments for independent contractors, bank statements, and assets.

Securing a subprime loan can help you build your positive payment history and prepare for a conventional refinance when you’re in a better position.

Property Types & Loan Sizes

California subprime loans are available for a wide range of property types and loan sizes, including:

Owner-occupied primary residences
Second homes and vacation homes
Investment properties (including multi-unit up to four units)
Loan amounts from $100,000 to $5 million
65% LTV for strict subprime

Loans structures include short-term bridge loans ranging from 12–24 months.

Key Loan Features & Costs

California poor-credit financing comes with higher costs and unique loan structures, which means it’s important to budget for interest, fees, penalties, and loan terms. Learn more about some of the key loan features and costs involved with subprime loans.

Interest Rates & APR Explained

The typical APR range for a California subprime loan is 8.99–11.99%, but your exact interest rate will vary based on your credit score, LTV, loan term, and any recent credit events. Your APR includes fees, giving you a comprehensive picture of borrowing costs.

Fees & Closing Costs Breakdown

There are additional fees and closing costs you have to pay when you get approved for a California subprime loan:

Origination fee of 2%
Underwriting and processing fees
Appraisal, credit report, title, and escrow charges
Third-party broker or loan-broker fees

Loan Terms, Structures & Amortization

Subprime loans are available with different loan terms and structures, including fixed-rate, adjustable-rate, balloon, and amortized loans.

Fixed-rate mortgages have the same rate throughout the loan term. Adjustable-rate loans are typically available in 3/1 or 5/1 periods, where the rate is adjusted annually after a 3- or 5-year period.

Balloon and interest-only options allow you to make interest-only payments for the duration of your loan. At the end of the loan term, the full balance is due and you have to make one “balloon” payment.

Subprime loans can also be amortized on a 15-year or 30-year schedule, which means you make equal monthly payments for the duration of the loan. Interest-only periods help reduce early payments.

Prepayment Penalties & Rescission Periods

California subprime loans typically have prepayment penalties and rescission periods. You have the right to rescind a loan for a period of up to 3 days under TILA, but only if it’s an owner-occupied property. Investment properties have no rescission rights.

Client Testimonials

“We were very pleased with the service we received from Source Capital. Communication was clear and responsive, funding was quick, and terms were as agreed and proposed.”

Brian OverstreetPresident, Advera Health Analytics

“Sacha and his team were on point from our first call to funding. They were professional and easy to work with. We will definitely be using them for our future transactions”.

Mark O’ToolePresident, Pacific Coast Home Mortgage & Real Estate Inc.

“The staff at Source Capital has helped me create new income streams. They are consistent, direct and deliver every time.”

Michael KornAgent, Keller Williams Realty

“As a lender myself, working with Source Capital shows that there are still a lot of good people in our industry, and we will definitely be in connection to do future business together. Job well done.”

Anthony TrujilloMortgage Broker, Paramount Partners

“I have never dealt with a hard money lender before but I can tell you my experience with Source Capital was very positive. I highly recommend”

Courtney RothClient

“Recently completed another flawless transaction with Source Capital. Why would anyone want to go anywhere else? They’re the best.”

Marianne BordognaAgent, Keller Williams Realty

“The team at Source Capital Funding was fantastic. Their professionalism, speed and solid loan terms is why I will be coming back to close more business with them.”

Sergio AbbudSenior Loan Officer, Better Rate Mortgage

“The team at Source are consummate professionals who work efficiently and effectively. Simply stated- truly exemplary and professional people”

Paul ElamOwner, San Diego’s Real Estate

“Source Capital has been an absolute pleasure to work with throughout. These guys are on top of their game.”

Tyler HansonAssociate Broker, Cushman & Wakefield

“In all my years, I can confidently say they are the most professional, prompt, courteous, and efficient private lender I have ever worked with!”

Greg ShieldsOwner, GSI Appraisals

“They were very responsive and extremely helpful and would certainly use them again. I highly recommend their services.”

Alvin FuchsAgent, Keller Williams Realty

“Highly recommend Source Capital Funding if you need money fast and you value efficiency. I will go back to them again if I need funding in the future. “

Kendall HeathClient

“I have always had a highly professional and honest experience with everyone on their team and would recommend to anyone looking for financing.”

Andrew BellahOwner, The Bellah Group

“They are always so patient, helpful, and professional. and have helped me so much! This can be such a stressful process, but they make it all so easy.”

Lauren MarcusClient

“Smooth and fast transaction as the loan was funded in 8 days. They are a pleasure to work with – Strongly Recommended.”

Borna EftekariAgent, Farmers Insurance

California Regulatory Protections

Subprime lending is heavily regulated to ensure borrowers are protected. Learn more about how we comply with California regulatory protections below.

AB 3108 Disclosure Requirements

AB 1038 requires clear, written disclosure of APR and total finance charges, payment schedule and prepayment penalties, and borrower rights under state and federal law.

Ability-to-Repay & Dodd-Frank Compliance

All of our non-QM loans meet Ability-to-Repay standards to ensure full Dodd-Frank compliance. We verify borrowers’ ability to repay, and avoid prohibited practices like loan flipping, excessive fees, and misleading teaser rates.

The Application & Funding Process

Applying for a loan has never been easier thanks to Source Capital. Our easy loan process saves you time and results in faster closing and approval times. Here’s how it works.

Document Checklist & Submission Tips

Start by making sure you have all the documents you need to apply for a loan. Here’s what you’ll need for your application:

Valid government photo ID
Two years of tax returns
Recent bank statements for all your accounts
Profit-and-loss statements if self-employed
Signed purchase agreement (for home purchases)

You can scan these documents and organize them into a single PDF to streamline the uploading process. Documents can be uploaded through our secure mobile-friendly portal.

Underwriting Flexibility & Speed

Our local underwriting process speeds up approval and funding times. We manually review and underwrite each loan, considering factors like your down payment, cash reserves, and proven rental income.

You can get pre-approved in hours, and fully approved in as little as 7-10 days. Investment and bridge loans can be funded in as little as 7–10 days.

Typical Timeline from Application to Funding

Here’s what you can expect from the moment you apply for a California subprime loan to the moment your loan is funded:

Inquiry & Prequalification (1–2 days)
Formal Application Submission (1 day)
Underwriting & Appraisal (3–5 days)
Closing & Funding (1–2 days)

(Note: Owner-occupied loans may require extra time for rescission and federal disclosures)

Why Borrow from Source Capital?

Subprime mortgages are our specialty. Discover why property owners and investors across the state choose Source Capital for their CA subprime mortgages:

Decades of Expertise

Source Capital boasts over 15 years of experience in subprime and poor credit lending. Our knowledgeable lenders expertly navigate complex lending scenarios to help you find a loan solution that meets your needs.

Easy Qualification

Our subprime loans in California are secured by your assets, not your creditworthiness and financial details. Those who have struggled to secure loans in the past due to less-than-ideal finances are welcome to apply.

Competitive Rates and Transparent Fees

We proudly offer industry-leading, competitive interest rates and clear, upfront fee structures. Your dedicated loan expert will take the time to ensure you understand all aspects of your loan—no hidden fees and no surprises.

Fast and Efficient Processing

As direct lenders, we have a significant advantage. Our streamlined, in-house underwriting and funding processes ensure rapid approvals. Approval for your CA subprime mortgage should never hold you back from time-sensitive real estate opportunities.

Source Capital’s Subprime Loan Offerings in California

Detailed Loan Features

Loan Amounts: Our loan amounts range from $100,000 up to $5 million depending on each borrower’s unique needs.
Loan-to-Value (LTV) Ratios: Borrow up to 65% LTV for first-position loans and 50% CLTV for second-position loans.
Interest Rates: Get a competitive interest rate on your loan, 8.99% to 11.99% for first-position loans and 11.99% to 13.99% for second position loans.
Loan Terms: Your short-term loan will range from 12 to 24 months, with special terms like adjustable rates or balloon payments as needed.
Timeframe: Speedy financing means your loan will close in 7-10 business days or less.

Eligible Property Types

Use a diverse range of properties to secure your poor credit mortgage in California:

Owner-Occupied Residential Properties:
- Single-family homes
- Condominiums
- Townhouses
Investment Properties:
- Single-family rental homes
- Multifamily apartment buildings
- Commercial real estate assets

California Subprime Mortgages: FAQ

Are There Still Subprime Mortgage Lenders?

Yes, subprime mortgage lenders like Source Capital are available, offering flexible financing solutions for borrowers with credit challenges, ensuring access to homeownership through non-traditional means.

What Is the Easiest Home Loan to Get Approved for with Bad Credit?

Subprime loans, also known as Non-QM loans, are often the easiest option for borrowers with bad credit due to their more lenient qualification criteria compared to traditional mortgages.

What Credit Score Is Needed for a Subprime Loan?

There is no set minimum credit score for subprime loans. Source Capital evaluates applications based on asset value rather than credit scores, providing opportunities for those with low or poor credit histories.

What Is the New Name for Subprime Loans?

Subprime loans are often referred to as non-prime or non-qualified mortgages. These terms reflect the flexible lending standards used to assist borrowers who might not meet traditional loan requirements.

Are Subprime Mortgages Safe?

When managed responsibly, subprime mortgages can be a safe option. Source Capital ensures transparency and clear communication, helping clients understand loan terms and potential risks.

Do You Offer Subprime Mortgages in California for Owner-Occupied Properties?

Yes, Source Capital offers subprime mortgage options for various property types, including owner-occupied residential properties like single-family homes and condominiums.

What Are Closing Times for Subprime Mortgages from Source Capital?

Source Capital’s in-house underwriting and streamlined processes facilitate fast approvals and closings, typically within 7-10 business days, ensuring timely access to funds.

How to Get Approved for a Bridge Loan

1. Apply Online

It takes minutes to complete our simple, online application to get prequalified for a loan.

2. Get Approval

After underwriting your loan, we will provide you a written Loan Commitment providing loan terms for approval.

3. Loan Funded

In a matter of days, not weeks like most lenders, the loan is funded through escrow and funds wired to you directly.

4. Pay Monthly

You make monthly payments via mail, phone or direct deposit. It’s that easy.

Get Funded Fast – Apply Today!

Provide us some brief information about your hard money needs and a decision maker will get back to you as soon as possible to discuss.

What We Offer

Same Day Approvals
Rates starting at 8.99% Interest
Poor Credit OK
No Debt to Income Requirements
No Prepayment Penalties
No Appraisal Fees
$100,000 to $5,000,000 Loan Amounts
Residential, Commercial, Industrial
1st & 2nd Trust Deeds
Up to 65% Loan-to-Value (LTV)
Up to 50% Combined LTV (2nd Loans)
Closings in 7-10 Days

NOTE: All loans are secured by real estate in AZ, CA, CO, TX and MN ONLY. We do not fund unsecured loans or loans for personal use. Please call us at 888.251.0861 if you are unsure of these parameters.

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