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in Colusa, CA
Both DSCR and hard money loans skip the W-2 verification. Neither cares about your personal income or tax returns.
But they serve completely different purposes in Colusa's real estate market. One finances long-term rental holds, the other funds quick flips and rehabs.
Choosing wrong costs you thousands in rate spread or forces early refinancing. Most investors in smaller markets like Colusa need to understand which tool fits which deal.
DSCR loans qualify you based on rental income alone. The property must generate enough rent to cover the mortgage payment, typically 1.0x to 1.25x coverage.
Terms run 30 years at fixed rates, usually 2-3 points above conventional. You need 20-25% down and a 620+ credit score in most programs.
These work for investors buying performing rentals they plan to hold. Not for properties needing major rehab or sitting vacant during construction.
Hard money lenders care about one thing: asset value. They lend 65-75% of after-repair value, not current condition.
Terms run 6-24 months at 9-14% rates plus 2-4 points upfront. Credit matters less than equity and exit strategy.
You use these for fix-and-flip deals or properties needing work before they can qualify for permanent financing. The high cost makes sense only for short holds.
Rate spread is the obvious one. DSCR runs 7-9%, hard money runs 10-14%. But term length matters more—30 years versus 12 months changes everything.
DSCR requires the property cash flows now. Hard money only cares it will cash flow after repairs. That difference determines which loan works for which property.
Approval speed flips the script. Hard money closes in 7-10 days because it's all about the asset. DSCR takes 20-30 days with full appraisal and rent analysis.
Exit strategy differs completely. DSCR is permanent financing you hold for years. Hard money forces a sale or refinance within months.
Pick DSCR when buying a rental that's already performing or needs minor cosmetic work. You want permanent financing and the numbers work at today's rent.
Pick hard money for properties needing substantial rehab, distressed purchases, or auction buys. The property can't qualify for traditional financing in current condition.
Many Colusa investors use both in sequence. Hard money funds the purchase and renovation, then refinance into DSCR once the property is rent-ready and stabilized.
Never use hard money for buy-and-hold unless you're certain the refinance works. Rates vary by borrower profile and market conditions.
Only if you can show market rent covers the payment. Most DSCR lenders require either current lease or solid rent comps proving 1.0x+ debt coverage.
Most hard money lenders close in 7-10 days with clear title. Asset-based approval skips the income verification that slows conventional loans.
DSCR typically requires 620+ credit. Hard money lenders accept 580-600 if you have strong equity and a clear exit plan.
Yes, this is standard practice. Once rehab is done and property is rented, refinance into 30-year DSCR financing to lock permanent rates.
DSCR needs 20-25% down on purchase price. Hard money lends 65-75% of after-repair value, often requiring more cash upfront for distressed properties.
No. DSCR qualifies on property income only, hard money on asset value. Neither requires W-2s or tax returns.