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in Citrus Heights, CA
Citrus Heights investors have two distinct financing paths for rental properties and fix-and-flip projects. DSCR loans and hard money loans both skip traditional income verification, but they serve different investment strategies.
Understanding which loan fits your timeline and property goals saves money and streamlines your Sacramento County investment plans. Each option has unique advantages depending on whether you're buying to hold or buying to renovate.
DSCR loans qualify you based on rental income from the property itself. Lenders calculate the debt service coverage ratio by dividing monthly rent by the mortgage payment, typically requiring a ratio of 1.0 or higher.
These loans work best for long-term rental holds in Citrus Heights. You get traditional loan terms of 15 to 30 years with fixed or adjustable rates, making them ideal for building a rental portfolio.
Down payments usually start at 20-25% for investment properties. Closing takes 30-45 days, similar to conventional loans, and you benefit from predictable monthly payments throughout the loan term.
Hard money loans focus on the property's current or after-repair value rather than rental income. These short-term loans typically last 6-24 months and fund quickly, often closing in 7-14 days.
Sacramento County fix-and-flip investors rely on hard money for speed and flexibility. Lenders approve based on the property's equity potential, making them perfect for renovation projects that need fast funding.
Expect higher interest rates and points compared to DSCR loans. Down payments range from 10-30% depending on experience and project scope, with many lenders offering renovation draws as work progresses.
Timeline separates these options dramatically. DSCR loans take 30-45 days to close with rates similar to conventional mortgages, while hard money closes in under two weeks with significantly higher costs.
Your investment strategy determines the right choice. Buy-and-hold investors in Citrus Heights save money with DSCR's lower long-term costs, while flippers need hard money's speed to secure competitive deals.
Qualification differs fundamentally. DSCR lenders verify the property generates sufficient rent to cover the mortgage. Hard money lenders evaluate the property's value and your exit strategy instead of cash flow.
Choose DSCR loans when buying rental properties you plan to hold long-term in Citrus Heights. The lower rates and extended terms maximize cash flow and build equity over time with predictable payments.
Select hard money when timing matters more than cost. If you're purchasing a fixer-upper, competing against cash offers, or need funding before traditional financing processes, hard money delivers speed.
Many Sacramento County investors use both strategically. They acquire and renovate with hard money, then refinance into a DSCR loan once the property is rent-ready and stabilized.
DSCR loans require rental income to qualify, making them unsuitable for flips. They work for properties generating immediate rent. Fix-and-flip projects need hard money or similar short-term financing instead.
DSCR loans typically require 620-680+ credit scores. Hard money lenders focus more on the deal than credit, sometimes approving scores as low as 550-600 depending on down payment and experience.
Hard money rates run 8-15% with 2-5 points in fees. DSCR loans typically range 1-3% above conventional rates. The speed premium with hard money costs significantly more over time.
Yes, this is a common strategy. Investors use hard money to acquire and renovate, then refinance to a DSCR loan once the property is stabilized and generating rental income.
Both work for single-family properties. DSCR suits long-term single-family rentals generating steady income. Hard money works for acquiring single-family homes needing renovation before renting or selling.