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in San Rafael, CA
San Rafael investors face a choice between two non-QM financing paths. DSCR loans work for buy-and-hold rental properties, while hard money fits fix-and-flip or bridge scenarios.
Both options skip W-2 income verification, but they serve completely different timelines and strategies. Understanding which loan matches your investment plan saves you thousands in interest and months of delays.
DSCR loans qualify you based on rental income, not paystubs. Lenders want a ratio above 1.0, meaning monthly rent covers the mortgage payment plus taxes and insurance.
These are 30-year fixed mortgages with rates typically 1-2% above conventional. You need a DSCR of at least 1.0 and 20-25% down, but you can close in 3-4 weeks once appraisal completes.
DSCR works for established rentals or properties you plan to hold long-term. Rates vary by borrower profile and market conditions, but expect pricing similar to jumbo loans with slightly higher spreads.
Hard money loans fund based on property value, not income or credit. Lenders focus on after-repair value and your exit strategy, approving deals conventional banks won't touch.
These are short-term loans, usually 6-24 months, with rates between 9-14% plus points. You pay 2-4 points upfront and get funding in 7-10 days for competitive purchases.
Hard money fits flips, heavy rehabs, or bridge financing when you need fast closings. The asset secures the loan, so credit scores matter less than equity and your track record.
Timeline separates these loans more than anything else. DSCR works for permanent financing you hold for years, while hard money is temporary capital you refinance out of quickly.
Cost structure differs dramatically. DSCR has lower rates but stricter rental income requirements, while hard money charges premium rates for speed and flexibility with no income verification at all.
Down payment requirements also split differently. DSCR typically needs 20-25% down on purchase price, while hard money often requires 30-40% loan-to-value based on current or after-repair value.
Marin County properties often justify both options given high values. DSCR makes sense when strong rents support debt service, while hard money works when you're adding value through renovation.
Choose DSCR when you're buying a rental property you plan to hold. The rental income covers payments, you want 30-year fixed terms, and you can wait 3-4 weeks to close.
Pick hard money when speed matters more than rate. You're flipping a property, need to close in days, or the property needs work before it qualifies for traditional financing.
San Rafael's competitive market sometimes forces the hard money route even if DSCR would work better long-term. You can always refinance into DSCR once renovations finish and you have lease agreements in place.
Most serious investors use both at different times. Hard money gets you into deals fast, then you refinance to DSCR for permanent financing once the property stabilizes.
Not usually. DSCR lenders want stabilized properties with current leases or market rent appraisals. Finish renovations first, then refinance to DSCR.
Hard money funds in 7-10 days versus 3-4 weeks for DSCR. That speed advantage matters in competitive San Rafael bidding situations.
DSCR wins on total cost if you hold 12+ months. Hard money's higher rate and points make it expensive beyond short holds.
No. Lenders use market rent appraisals for vacant properties. You just need the DSCR ratio to hit 1.0 based on those rents.
Yes. Hard money lenders focus on equity and exit strategy over credit. Scores below 600 still get approved with enough skin in the deal.