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in Colfax, CA
Colfax investors face a choice between two non-QM options that serve different purposes. DSCR loans offer long-term rental financing based on property cash flow, while hard money provides fast capital for flips and renovations.
Both bypass traditional income verification, but they differ dramatically in rates, terms, and ideal use cases. Your investment timeline and property condition determine which one makes sense.
DSCR loans approve you based on rental income divided by monthly debt payments. If the property generates enough rent to cover the mortgage with a ratio above 1.0, you qualify without showing tax returns or pay stubs.
Terms run 30 years fixed at rates typically 1.5-3% above conventional mortgages. You can finance multiple properties this way, building a rental portfolio without hitting income documentation walls.
Expect 20-25% down and credit scores above 640. Closing takes 30-45 days, similar to traditional loans but with underwriting focused entirely on property performance.
Hard money lenders fund based on property value and your equity position, not income or credit. They close in 7-14 days, making them ideal when you need to move fast on distressed properties or fix-and-flip deals.
Rates run 9-14% with terms of 6-24 months. You pay points upfront, usually 2-4% of the loan amount. These loans cost more because they're short-term bridge financing, not permanent debt.
Lenders typically cap loan-to-value at 65-75% of after-repair value. You'll need skin in the game and a clear exit strategy, whether that's refinancing to DSCR or selling after renovation.
The rate gap is stark: DSCR loans sit around 7-9% while hard money hits double digits. But comparing them on rate alone misses the point since they serve completely different investment strategies.
DSCR works for stabilized rentals you plan to hold. Hard money works for properties that need work or situations where speed matters more than cost. One is permanent financing, the other is temporary capital.
Down payments tell the story too. DSCR requires 20-25% of purchase price. Hard money often demands 25-35% because lenders need equity cushion on riskier, shorter-term deals.
Choose DSCR if you're buying a rental property in Colfax that's already rent-ready or needs only minor work. The lower rate and long-term structure make sense when you're collecting rent from day one.
Go hard money when you're buying a distressed property that won't qualify for traditional financing, facing competition that requires a fast close, or planning a renovation-then-refinance strategy. The speed and asset-based approval justify the higher cost.
Many investors use both in sequence. Hard money funds the purchase and rehab, then you refinance to DSCR once the property is stabilized and generating rental income. This combo maximizes both speed and long-term affordability.
Yes, this is a common strategy. Once renovations are done and the property generates rental income, you refinance to DSCR for better rates and long-term financing.
DSCR typically requires 640+ credit scores. Hard money lenders care more about equity and exit strategy, often working with lower scores or credit issues.
Yes, but confirm with your lender. Some hard money lenders prefer urban areas. DSCR lenders generally accept any location if rental comps support the income.
DSCR loans go up to several million based on rental income. Hard money maxes around 65-75% of after-repair value, with caps varying by lender.
Hard money closes in 7-14 days. DSCR takes 30-45 days since it requires appraisals, title work, and rental income verification.