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in Point Arena, CA
Point Arena investors face a choice between two non-QM financing paths. DSCR loans qualify you on rental income alone, while hard money loans approve based on property value.
Both skip traditional income documentation. But DSCR loans work for buy-and-hold rentals with stable tenants. Hard money fits fix-and-flip projects or properties needing renovation before they can cash flow.
DSCR loans approve you when the property's rent covers 100-125% of the mortgage payment. No personal income verification. Terms run 30 years fixed or 5-10 year ARMs at rates typically 1-2% above conventional.
Expect 15-25% down and credit scores above 620. Lenders want proof the rental income works through leases or market rent appraisals. These loans close in 30-45 days and work for long-term rental strategies in Point Arena's coastal vacation market.
Hard money loans fund in 7-14 days based purely on property value. Lenders advance 60-75% of current value or 65-85% of after-repair value. Rates run 8-12% with 2-4 points upfront. Terms last 6-24 months.
Credit matters less than the deal itself. You need a clear exit strategy like refinancing into DSCR or selling after renovation. Hard money works for Point Arena properties that need work before they qualify for traditional financing or generate rental income.
Speed versus cost defines this choice. Hard money closes in days but costs 8-12% plus points. DSCR takes a month but runs 6-8% with lower fees. Hard money requires an exit plan within two years. DSCR lets you hold indefinitely.
Down payments differ too. DSCR needs 15-25% down on stable rentals. Hard money lends on distressed properties but caps at 65-75% loan-to-value. For Point Arena vacation rentals already generating income, DSCR wins. For fixer properties on the coast, hard money gets you in fast.
Choose DSCR when you're buying a rental property that already produces income or will within 30 days. The property needs to generate 100-125% of the mortgage payment in rent. This works for Point Arena vacation rentals or long-term tenant properties in decent condition.
Pick hard money when the property needs work before it can rent or when you're flipping. Also use it when you need to close in under two weeks to beat competition or secure a foreclosure. Plan your refinance or sale exit before you sign. Rates vary by borrower profile and market conditions.
Yes, once the property is renovated and rented. Most investors use hard money for 6-12 months, then refinance into DSCR for long-term holding.
Yes, if you can document consistent rental income. Lenders accept VRBO or Airbnb statements showing the property covers the mortgage payment.
DSCR lenders want 620 minimum. Hard money lenders care more about the deal than your credit, often approving scores below 600.
Yes. Use hard money to buy and renovate, then refinance into DSCR once the property generates rental income and qualifies.
DSCR loans have standard closing costs around 2-3%. Hard money adds 2-4 points upfront, making total costs significantly higher.