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in Huron, CA
Most Huron investors face a choice between DSCR loans for cash-flowing rentals and hard money for quick rehabs. Both ignore your W-2 income, but they serve completely different strategies.
DSCR works when you're buying a property that already generates rent. Hard money gets you into distressed deals that need work before they pencil out.
DSCR loans qualify you based on the property's rent versus its mortgage payment. If the rent covers 1.0-1.25x the debt service, you're approved regardless of your tax returns.
These are 30-year loans with rates typically 1-2% above conventional. You can lock in long-term financing on single-family rentals, multi-units, or even short-term rental properties in Huron.
Minimum DSCR ratio is usually 1.0, meaning rent equals or exceeds the payment. You'll need 20-25% down and a 640+ credit score.
Hard money lenders fund based on the property's after-repair value, not current condition. They'll loan on houses most banks won't touch until you fix them.
Expect rates of 8-12% with 2-4 points upfront. Terms run 6-24 months because these are bridge loans, not permanent financing.
Approval happens in days, not weeks. You put down 10-30% depending on experience and the deal. Credit matters less than your exit strategy.
Local decision guide
Use this comparison to weigh DSCR Loans and Hard Money Loans through local payment fit, eligibility, documentation, and timing before choosing a path in Huron.
Most Huron investors face a choice between DSCR loans for cash-flowing rentals and hard money for quick rehabs. Both ignore your W-2 income, but they serve completely different strategies.
DSCR works when you're buying a property that already generates rent. Hard money gets you into distressed deals that need work before they pencil out.
DSCR loans qualify you based on the property's rent versus its mortgage payment. If the rent covers 1.0-1.25x the debt service, you're approved regardless of your tax returns.
Timeline separates these loans first. Hard money closes in a week when you need to jump on a foreclosure. DSCR takes 3-4 weeks like a normal mortgage.
Cost structure differs dramatically. DSCR runs 6.5-8.5% for 30 years. Hard money hits 10%+ for under two years, plus you're paying points at closing.
Property condition matters more with DSCR. The rental needs to be livable and generating income now. Hard money funds properties that need gutting.
Use DSCR when you're buying a turnkey rental or a property that needs cosmetic updates only. The rental income qualifies you, and you lock in long-term financing immediately.
Use hard money when you're buying a distressed property below market and plan to renovate then sell or refinance within 12 months. Speed matters more than rate.
Most Huron investors I see use hard money to acquire and rehab, then refinance into DSCR once the property is stabilized and renting. That's the classic strategy.
Minor work is fine, but the property needs to be rentable at closing. Major rehabs require hard money first, then refinance to DSCR.
On a $300k loan, DSCR costs roughly $1,800/month while hard money runs $2,500+. Rate difference adds up fast on longer holds.
Most hard money lenders want a scope of work and budget. They hold back rehab funds in draws as work completes.
Yes, most investors refinance once repairs finish and a tenant moves in. DSCR lenders see this constantly.
Neither works well for land. Hard money might fund it short-term if you're building immediately. DSCR requires existing rental income.