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in Taft, CA
Real estate investors in Taft have two powerful financing options that don't rely on W-2 income. DSCR loans use rental income to qualify, while hard money loans focus purely on the property's value.
Both loans serve different investment strategies in Kern County's market. Understanding when to use each option helps you maximize returns and minimize costs on your Taft properties.
DSCR loans qualify investors based on a property's rental income compared to its mortgage payment. If the rental income covers the debt payment, you can get approved without proving personal income or tax returns.
These loans typically offer 30-year terms with competitive rates. They work well for buy-and-hold investors in Taft who want stable, long-term financing for rental properties.
Approval focuses on the property's cash flow potential. Lenders calculate the debt service coverage ratio by dividing monthly rental income by the monthly mortgage payment, typically requiring at least 1.0 to qualify.
Hard money loans are short-term financing secured by the property's current or after-repair value. Approval happens quickly—often within days—making them perfect for time-sensitive opportunities in Taft.
These loans typically last 6 to 24 months with higher interest rates. Investors use them to acquire properties quickly, complete renovations, then refinance into permanent financing or sell for profit.
Lenders base decisions almost entirely on the property's value and equity position. Your credit score and income matter less than the deal itself and your exit strategy for repayment.
Timeline separates these loans most dramatically. DSCR loans close in 2-4 weeks and last up to 30 years, while hard money loans fund within days but must be repaid within 1-2 years.
Cost structure differs significantly. DSCR loans carry rates similar to conventional mortgages with standard closing costs. Hard money loans charge higher rates plus points upfront—expect 2-5 points at closing.
Use cases rarely overlap. Choose DSCR for rental properties you plan to hold long-term in Taft. Select hard money when you need fast funding for acquisitions, foreclosures, or renovation projects with quick turnarounds.
Choose DSCR loans when buying rental properties you'll hold for years. If a Taft property generates enough rent to cover the mortgage payment and you want stable financing, DSCR makes sense financially.
Pick hard money when speed matters more than cost. Competing for foreclosures, auction properties, or distressed homes in Kern County requires quick funding that traditional lenders can't provide.
Many successful investors use both strategically. Start with hard money to acquire and renovate a property, then refinance into a DSCR loan once repairs are complete and the property is rented.
DSCR loans require the property to be rent-ready or already generating rental income. For renovations, hard money works better initially, then refinance to DSCR once repairs are done and you have a tenant.
DSCR loans typically require 620-640 minimum credit scores. Hard money lenders focus more on the deal and may approve scores as low as 580, though better credit improves your terms.
DSCR loans usually need 20-25% down for investment properties. Hard money lenders might require 25-35% down or loan based on after-repair value, depending on the project scope.
Hard money loans can close in 3-7 days when needed. DSCR loans take 2-4 weeks, similar to conventional mortgages. Choose based on whether you need speed or better long-term rates.
No, DSCR loans qualify based solely on the subject property's rental income. Each property must generate enough rent to cover its own mortgage payment independently.