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in Willits, CA
Both DSCR and hard money loans ignore your W-2 income and tax returns. That makes them popular with investors in Willits who want financing based on the property, not their personal finances.
The real difference comes down to timeframe and purpose. DSCR loans work for long-term rentals. Hard money is built for quick flips and rehabs.
DSCR loans qualify you based on rental income the property generates. If rent covers the mortgage payment by enough margin, you get approved. Most lenders want a ratio of 1.0 or higher.
You'll get 30-year fixed or adjustable rate terms, just like conventional mortgages. Rates run 1-2% higher than traditional loans. Expect to put down 20-25% minimum on investment properties.
Hard money lenders fund based on the property's current or after-repair value. Your credit and income barely factor in. These loans close in 7-14 days when you need to move fast on a deal.
Terms run 6-24 months with rates between 8-15%. Points range from 2-5% of the loan amount. You're paying for speed and flexibility, not low rates.
DSCR loans need the property to be rent-ready or already generating income. Hard money works for properties that need major work. If you're buying a Willits fixer that needs a new roof and kitchen, hard money is your only option.
Cost structure flips between them. DSCR gives you lower rates but takes 30-45 days to close. Hard money charges premium rates and points but funds in under two weeks. Choose based on whether you need speed or savings.
Use DSCR when you're buying a turnkey rental or a property that needs only cosmetic updates. The lower rate saves thousands over time. This works for investors building a portfolio they plan to hold.
Choose hard money when you need to close fast on a flip or a property needs serious rehab. The high cost makes sense for 6-12 month projects where speed matters more than rate. Most investors refinance into DSCR loans once renovations finish.
No. DSCR lenders require the property to generate rental income at closing. Flips don't produce rent, so you need hard money instead.
DSCR loans typically require 620-640 minimum credit. Hard money lenders care less about credit, often approving scores as low as 550.
Most lenders want 6-12 months of rental history before approving a DSCR loan. Plan your timeline accordingly when using hard money.
DSCR loans handle 1-4 unit residential investment properties. Hard money can fund commercial deals, but terms vary significantly by lender.
Hard money rarely charges prepayment penalties since quick payoff is expected. DSCR loans may have 1-3 year prepayment penalties depending on the lender.