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in Fairfax, CA
Fairfax investors looking to finance rental properties face a real choice: DSCR loans for long-term holds or hard money for quick flips. Both skip W-2 income verification, but they serve completely different strategies.
DSCR loans work when rental income covers the debt. Hard money works when the property value does. Choosing wrong costs you thousands in rate spreads or wasted time.
DSCR loans qualify you based on rental income divided by mortgage payment. If that ratio hits 1.0 or higher, most lenders approve. Your tax returns don't matter.
Terms run 30 years fixed with rates typically 1-3 points above conventional. You can close in 2-3 weeks once you show lease agreements and rent comps. Minimum credit score hovers around 620-640.
Down payments start at 20% for single-family rentals. Some Marin properties with strong rent ratios qualify at 15% down. The property cash flows from day one or the deal dies.
Hard money lenders care about one thing: property value after repairs. They'll fund 65-75% of the ARV regardless of current condition. Credit scores matter less than exit strategy.
Rates run 8-12% with 2-4 points upfront. Terms max out at 12-24 months because these aren't hold loans. You pay interest-only monthly and refinance or sell before the balloon hits.
Approval takes 3-7 days if you have a solid property and clear exit plan. No tax returns, no employment verification. Just appraisal, scope of work, and proof you can execute the flip or refinance timeline.
Rate spread is the biggest shock: DSCR runs 7-9% while hard money hits 9-13%. That's $500-800 monthly difference on a $600k Fairfax property. Hard money also charges 2-4 points upfront that DSCR lenders skip.
Timeline matters more than borrowers think. DSCR takes 15-21 days to close. Hard money funds in a week. If you're competing on a fixer in Fairfax, that speed wins deals.
Exit requirements differ completely. DSCR loans expect you to hold and rent. Hard money expects you to flip or refinance within 12-18 months. Pick wrong and you're stuck refinancing early or paying extension fees.
Use DSCR when you're buying a Fairfax rental that's already rent-ready or needs minor cosmetic work. The property must cash flow immediately because underwriting runs rent comps against the full mortgage payment including taxes and insurance.
Use hard money when you're buying a fixer that needs 30-90 days of rehab before it can rent or sell. Speed matters more than rate when you're competing against cash offers in Marin County.
Never use hard money for a buy-and-hold rental. The rate kills cash flow and the balloon forces a refinance you might not qualify for. Never use DSCR for a flip — the 30-year amortization wastes money on a 6-month hold.
Yes, that's the standard play for fixers. Rehab with hard money, get tenants in place, then refinance to DSCR once rent covers debt service.
Hard money funds in 3-7 days. DSCR takes 15-21 days because lenders verify rent comps and run title more carefully.
Most lenders want 6-12 months of payments in reserves. Hard money rarely checks reserves if the property value supports the loan.
Yes, DSCR works for 1-4 unit properties. Underwriting combines all rental income against the total mortgage payment.
DSCR typically requires 620-640 minimum. Hard money will go down to 580 if property value and exit strategy are strong.