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in Escalon, CA
Escalon investors often weigh DSCR loans against hard money when buying rental properties. Both skip personal income verification, but they serve different deal timelines.
DSCR loans work for buy-and-hold investors seeking long-term financing. Hard money fits fix-and-flip projects or bridge financing when speed matters most.
DSCR loans qualify you based on rental income alone. Lenders calculate debt service coverage ratio by dividing monthly rent by the mortgage payment.
Most lenders want a 1.0 DSCR minimum, meaning rent covers the full payment. Terms run 30 years with rates typically 1-2% above conventional mortgages.
You can close in 15-30 days with credit scores as low as 620. No tax returns, no pay stubs, no employment verification needed.
Hard money lenders fund based on the property's current or after-repair value. Your personal finances barely matter—the collateral drives approval.
Terms run 6-24 months with rates from 8-15%. Lenders advance 65-75% of purchase price or ARV for rehab projects.
You can close in 5-10 days once the property appraises. Expect 2-5 points in origination fees on top of higher rates.
DSCR loans cost less but take longer. Hard money closes fast but charges premium rates and hefty origination fees.
DSCR requires stabilized rental income and longer approval timelines. Hard money works for vacant properties, major rehabs, or deals needing immediate funding.
Exit strategy matters. DSCR borrowers hold properties for years. Hard money borrowers refinance out within 12-18 months or sell after renovations.
Choose DSCR when buying turnkey Escalon rentals or properties with tenants in place. The lower rate saves thousands monthly on buy-and-hold investments.
Pick hard money for foreclosures needing work or when sellers demand quick closes. It's bridge financing—not a permanent loan.
Some investors use both strategically. Buy with hard money, complete renovations, stabilize rent, then refinance into a DSCR loan for long-term hold.
No. DSCR loans require stabilized rental income before closing. Hard money handles properties needing major repairs or without current tenants.
DSCR wins if you hold beyond 12 months. Hard money's high rates and points make it expensive past the first year.
DSCR typically needs 20-25% down. Hard money varies—some lenders go to 75% LTV, others cap at 65% depending on project risk.
Yes. Most investors use hard money to buy and renovate, then refinance to DSCR once the property generates rental income.
Both work fine remotely. DSCR requires more documentation upfront. Hard money moves faster but needs strong local contractor relationships.