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in Willows, CA
Willows investors face a choice between two non-QM financing paths. DSCR loans use rental income for qualification, while hard money relies on property value alone.
Both skip traditional W-2 verification, but they serve different investment timelines. One builds long-term rental portfolios, the other funds quick flips and rehabs.
DSCR loans qualify you based on rent divided by mortgage payment. If a Willows duplex rents for $2,400 monthly and the PITI is $2,000, your DSCR is 1.2—usually enough for approval.
Lenders want 1.0 to 1.25 DSCR minimums depending on credit. Terms run 30 years fixed with rates 1-3% above conventional. You need 20-25% down and credit above 640.
This works for landlords holding properties long-term. You keep rental income, build equity, and refinance later if rates drop or your income situation changes.
Hard money lenders fund based on after-repair value, not income. They'll loan 65-75% of what a Willows property will be worth after renovations, giving you capital to buy and fix simultaneously.
Terms run 6-24 months with rates between 8-15%. Points range from 2-5% upfront. Speed matters here—approvals happen in days, closings in two weeks.
Investors use hard money when timing beats cost. You buy a distressed property, renovate fast, then refinance to DSCR or conventional once it's stabilized and rented.
DSCR loans cost less but move slower. You'll pay 6-9% rates over 30 years versus 10-15% for 12 months with hard money. DSCR takes 3-4 weeks to close; hard money closes in 10 days.
Hard money ignores credit scores below 600 and funds non-performing properties. DSCR needs tenants already paying rent and credit above 640. One finances the flip, the other finances the hold.
In Glenn County's small rental market, DSCR works for turnkey properties you'll keep. Hard money makes sense when you're competing with cash buyers on fixer-uppers around Willows.
Choose DSCR if you're buying a property that already rents or needs minor cosmetic work. You plan to hold it for years, collect cash flow, and want the lowest payment possible.
Pick hard money when you're buying a distressed property that can't qualify for traditional financing. You need speed to close, have a renovation budget, and will exit within 12 months via sale or refinance.
Many Willows investors use both in sequence. Hard money funds the purchase and rehab, then they refinance to DSCR once the property is rent-ready. That's how you compete with cash while keeping long-term costs low.
No, the property must be rent-ready and already generating income. Lenders verify current leases or comparable market rents before funding.
Most hard money lenders close in 7-14 days with minimal documentation. Speed depends on clear title and property valuation completion.
DSCR typically requires 640+ credit scores. Hard money lenders often accept 580-600 or focus primarily on asset value instead of credit.
Yes, this is common strategy. Once renovations finish and tenants move in, you refinance to DSCR for better rates and long-term holding.
DSCR has lower upfront points but standard closing costs. Hard money charges 2-5 points plus fees, making it more expensive initially.
DSCR lenders typically require 6-12 months reserves. Hard money focuses on exit strategy and may require less liquid reserves at closing.