Question 1

Can I use DSCR for a property that needs renovation?

Accepted Answer

Only if it's already rented or will rent immediately. Most DSCR lenders require rental income within 30-60 days of closing. For major rehabs, start with hard money.

Question 2

How much does hard money really cost compared to DSCR?

Accepted Answer

Hard money runs 9-14% plus 2-4 points upfront. DSCR rates sit around 7-8% with no points. On a 12-month flip, hard money costs $20K-$30K more on a $500K loan.

Question 3

Do I need reserves for DSCR loans?

Accepted Answer

Most lenders want 6-12 months of reserves per property. That's enough cash to cover mortgage payments if the unit sits vacant. Requirements vary by lender and credit profile.

Question 4

Can I refinance hard money into DSCR without seasoning?

Accepted Answer

Some DSCR lenders allow immediate refinance if the property appraises and rents cover the new payment. Others require 6-12 months of ownership. We know which lenders waive seasoning.

Question 5

Which loan works better for Monterey's vacation rental market?

Accepted Answer

DSCR works if you have 12 months of rental history or a strong comparable rent analysis. Hard money fits short-term purchases before you stabilize STR income and convert to DSCR.

DSCR Loans vs Hard Money Loans in Monterey: Which Investor Loan Fits Your Deal?