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in Nevada City, CA
Nevada City investors face a choice between two powerful non-QM options. DSCR loans work for cash-flowing rentals, while hard money suits quick flips and rehabs.
Both skip traditional income verification. The difference lies in your timeline and whether the property generates rent now or needs work first.
DSCR loans qualify you based on rental income, not paystubs. Lenders divide monthly rent by monthly mortgage payment to get your ratio.
You need a DSCR of at least 1.0, meaning rent covers the payment. Expect 20-25% down, rates around 7-9%, and 30-year terms.
These work for investors with existing tenants or properties ready to rent. Credit requirements are relaxed but not eliminated—most lenders want 640 minimum.
Hard money lenders fund based on property value, not your finances or the building's current condition. They focus on after-repair value.
Terms run 6-24 months with rates of 9-14% plus 2-4 points upfront. You can close in days, not weeks.
These loans cover acquisition and renovation costs for properties that need work. The exit strategy matters more than your credit score—lenders want to know how you'll pay them off.
Timeline separates these loans. DSCR takes 3-4 weeks to close and works for long-term holds. Hard money closes in days but costs more monthly.
Property condition matters differently. DSCR requires rent-ready properties with tenants or strong rental comps. Hard money funds distressed properties that need repairs.
Exit strategy differs completely. DSCR borrowers plan to hold and collect rent for years. Hard money borrowers plan to renovate and either sell or refinance within 12-18 months.
Choose DSCR if you're buying a rental that's already leased or ready to rent immediately. The lower rates and long terms make sense when you plan to hold for years.
Choose hard money if the property needs work before it can produce income. Nevada City has historic homes that often need updating—hard money covers both purchase and renovation.
Many investors use both strategically. Start with hard money to buy and fix, then refinance into DSCR once tenants are in place and the property cash flows.
Most DSCR lenders require properties to be rent-ready at closing. If repairs prevent immediate occupancy, hard money works better until renovations complete.
Most look at credit but focus on property value and your exit plan. Scores below 600 can still get approved if the deal makes sense.
Plan for 6-12 months minimum. You need completed renovations, a tenant in place, and 6-12 months of payment history on the hard money loan.
DSCR typically costs 2-3% in fees. Hard money adds 2-4 points upfront plus higher ongoing costs, making it more expensive overall.
Yes. DSCR qualifies on rental income, hard money on property value. Neither requires traditional employment verification or tax returns in most cases.