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in Mendota, CA
Mendota investors face a clear choice: long-term rental financing or short-term fix-and-flip capital. DSCR loans underwrite on property income, while hard money lends on asset value.
Both skip traditional income verification, but they serve different strategies. DSCR works for cash-flowing rentals you plan to hold. Hard money finances quick turnarounds where speed trumps rate.
DSCR loans qualify you based on monthly rent versus monthly payment. If the property generates $1,500 in rent and the PITIA payment is $1,200, you're at 1.25 DSCR—typically enough to close.
Terms run 30 years fixed or ARM at rates 1-3% above conventional. No tax returns, no pay stubs, no employment letters. Just an appraisal showing the rent covers the debt.
Expect 20-25% down and credit scores around 620 minimum. Closing takes 21-30 days, similar to conventional loans but without the income documentation maze.
Hard money lenders fund based on after-repair value, not current condition. They'll lend 70-80% of what the property will be worth after renovations, making distressed purchases possible.
Rates run 8-12% with 2-5 points upfront. Terms are 6-24 months, not decades. You're paying for speed and flexibility—closings happen in 5-10 days when needed.
Credit matters less than equity and exit strategy. Lenders want to see how you'll pay them back: sale proceeds or refinance into permanent financing. Cash flow during the hold period isn't the focus.
DSCR charges 6-8% for 30 years. Hard money charges 10%+ for 12 months. The rate difference reflects the timeline—you're not meant to keep hard money long-term.
DSCR requires the property to cash flow from day one. Hard money doesn't care about current rent because you're renovating anyway. One qualifies on income, the other on equity and exit.
Closing speed splits them too. DSCR takes three weeks minimum for appraisals and underwriting. Hard money can close in a week when you're competing with cash buyers on a foreclosure.
Choose DSCR when you're buying a rental that's ready to lease or needs minor cosmetic work. The property should generate enough rent to cover the mortgage at a 1.0-1.25 ratio minimum.
Choose hard money when you're buying a distressed property in Mendota that needs major rehab before it can attract tenants. Also use it when you need to close faster than conventional or DSCR timelines allow.
Many investors use both strategically: hard money to acquire and renovate, then refinance into DSCR once the property is rent-ready and stabilized. The combination covers acquisition through long-term hold.
Only minor cosmetic work. DSCR lenders need the property generating rent within 30-60 days of closing, so major rehabs won't qualify until they're complete.
Most hard money lenders offer extensions for 3-6 months at higher rates and additional points. Avoid this by planning your exit before you close.
DSCR has lower rates but higher total interest over 30 years. Hard money costs more upfront but you pay it off in months, not decades.
Yes. Both are investor loans for rental properties or flips. Neither works for primary residences or second homes you'll occupy yourself.
Credit matters less than equity and exit plan, but most hard money lenders still want 580+ minimum. They focus on the deal, not your credit story.