Loading
in Sacramento, CA
Sacramento investors often debate DSCR versus hard money loans. Both skip W-2 income verification, but they serve completely different purposes.
DSCR loans work for rental property cash flow. Hard money loans fund quick acquisitions and rehabs. Picking the wrong one costs you thousands in unnecessary interest.
DSCR loans qualify you based on rental income, not your tax returns. Lenders want a ratio of 1.0 or higher—monthly rent must cover the mortgage payment.
You get 30-year fixed rates, typically 7-9% as of February 2026. Expect 20-25% down and credit scores above 660. These work for buy-and-hold investors building rental portfolios.
Hard money loans fund deals in 5-10 days based on property value, not your credit. Rates run 9-14% with 2-4 points upfront. Terms cap at 12-24 months.
These work for fix-and-flip projects or bridge financing when you need capital fast. Sacramento investors use them to buy distressed properties at auction or close before competitors.
DSCR loans cost less but take 30-45 days to close. Hard money closes in a week but charges double the rate. DSCR requires stable rental income; hard money only cares about property value.
Credit matters for DSCR—you need 660 minimum. Hard money lenders approve borrowers with 580 scores if the deal makes sense. DSCR keeps you financed long-term; hard money forces a quick exit.
Choose DSCR if you're buying a turnkey rental in Midtown or Land Park. You want low rates and long-term financing. The property already generates rent, so qualification is straightforward.
Pick hard money for distressed properties in Oak Park or Del Paso Heights that need work. You need speed to beat other buyers, then you'll refinance or sell within 12 months.
Yes, most Sacramento investors do exactly that. You close fast with hard money, complete renovations, then refinance to DSCR once the property cash flows.
DSCR loans start at 20% down. Hard money typically requires 25-35% down because lenders price in higher risk and shorter terms.
Yes. Both DSCR and hard money lenders fund properties held in LLCs, which most Sacramento investors prefer for liability protection.
DSCR rates hover around 7-9% for 30 years. Hard money charges 9-14% for 12-24 months. Rates vary by borrower profile and market conditions.
Hard money works for ground-up construction. DSCR loans typically require completed properties with established rental history or comparable rent data.