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in Lincoln, CA
Lincoln investors have two main non-QM options when personal income won't cut it: DSCR loans and hard money. DSCR loans use rental income to qualify you for long-term financing. Hard money loans use property value to fund quick acquisitions and rehabs.
Your choice depends on whether you need 30-year financing for a cash-flowing rental or 6-12 month capital for a fix-and-flip. Most Lincoln investors use hard money to acquire distressed properties, then refinance into DSCR loans once tenants are in place.
DSCR loans work like conventional mortgages but qualify you on the property's rental income instead of your W-2. Lenders calculate your debt service coverage ratio by dividing monthly rent by the mortgage payment. A ratio above 1.0 means the property pays for itself.
Terms run 30 years at fixed or adjustable rates. You need 20-25% down and credit scores typically above 660. DSCR loans make sense for buy-and-hold investors who want long-term financing on stabilized rentals in Lincoln's growing residential areas.
Hard money loans fund in days, not weeks. Lenders care about the property's after-repair value and your exit strategy, not your credit score or income. These loans typically max out at 65-75% of purchase price plus rehab costs.
Terms run 6-24 months with interest-only payments. Rates range from 8-12% plus 2-4 points upfront. Lincoln investors use hard money to grab distressed properties fast, complete renovations, then either sell or refinance into permanent financing.
DSCR loans cost less but take longer to close. You'll pay 6-8% interest over 30 years versus 8-12% for 12 months. DSCR loans require stable rental income and higher credit scores. Hard money loans need equity and a clear exit plan.
Speed matters most with hard money. You can close in a week when competing against cash buyers on Lincoln foreclosures or estate sales. DSCR loans take 3-4 weeks but provide permanent financing you won't need to replace in a year.
Use hard money when speed beats cost. If you're buying a distressed Lincoln property that needs work before it can rent, hard money gets you to closing before another investor snatches it. Plan your renovation timeline and refinance exit before you sign.
Choose DSCR loans for turnkey rentals or properties with tenants already in place. The property needs to be rent-ready and generate enough income to cover the mortgage payment. Lincoln's newer subdivisions with stable rental demand suit DSCR financing better than hard money's flip-focused approach.
Yes, most investors do exactly that. You refinance from hard money into DSCR once renovations finish and a tenant moves in with a signed lease.
DSCR loans typically require 660+ credit scores. Hard money lenders focus on property value and may approve borrowers with scores below 600.
DSCR loans yes, hard money sometimes. Hard money lenders often want to see previous flip experience or require you to hire a licensed contractor.
No, both are investment property loans only. You need conventional or FHA financing for homes you plan to live in yourself.
DSCR loans require 20-25% down. Hard money lenders typically fund 65-75% of purchase price, meaning you bring 25-35% plus closing costs.