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in Clearlake, CA
Clearlake investors often need financing that doesn't depend on W-2 income. DSCR loans and hard money loans both skip personal income verification, but they serve completely different purposes.
DSCR loans work for long-term rental holds with stable cash flow. Hard money loans fund quick acquisitions and rehabs where speed matters more than rate.
DSCR loans qualify you based on rental income divided by monthly debt payments. Lenders want a ratio above 1.0, meaning rent covers the mortgage. Rates run 1-2% above conventional loans with 15-30 year terms.
You need 20-25% down and decent credit, typically 620 or higher. These work for investors building rental portfolios in Clearlake who plan to hold properties long-term. Closing takes 30-45 days.
Hard money loans fund based on property value, not income or credit. Lenders care about the asset and your exit strategy. Rates run 9-14% with terms of 6-24 months, sometimes interest-only.
You need 25-35% down or equity. These loans close in 7-14 days, which matters when competing for distressed Clearlake properties. Expect 2-4 points in origination fees plus higher closing costs.
DSCR loans cost less but take longer. Hard money costs more but closes fast. DSCR requires stable rental income and decent credit. Hard money only requires equity and an exit plan.
DSCR works for turnkey rentals you'll hold for years. Hard money works for fixers you'll renovate and refinance or sell within months. The rate difference is significant but reflects completely different use cases.
Use DSCR loans when buying rental properties you plan to hold. The lower rate matters over a 30-year hold. Use hard money when speed beats cost or the property needs work before it qualifies for traditional financing.
Most Clearlake investors use hard money for acquisition and renovation, then refinance into a DSCR loan once the property is rent-ready. This two-step approach lets you move fast while locking in long-term financing later.
Not usually. DSCR lenders want rent-ready properties with existing tenants or market-rate rental comps. Major rehabs need hard money first.
Most hard money lenders accept 580+ credit or don't check credit at all. They care more about your equity and exit strategy.
Hard money runs 9-14% with 2-4 points in fees. DSCR runs 7-9% with standard closing costs. Over 12 months, hard money costs roughly double.
You refinance, not convert. Once the property is renovated and rented, you apply for a DSCR loan to pay off the hard money.
DSCR lenders increasingly accept short-term rental income with proper documentation. Hard money works regardless of rental strategy since it's asset-based.