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in Belmont, CA
Real estate investors in Belmont have two powerful financing options that don't rely on traditional income verification. DSCR loans and hard money loans serve different investment strategies, each with distinct advantages for San Mateo County properties.
Understanding which option fits your investment timeline and property goals can save you thousands in costs. Both loan types offer speed and flexibility that conventional mortgages can't match, but they work best in very different scenarios.
DSCR loans qualify you based on rental income potential rather than your W-2 or tax returns. The property itself proves it can cover the mortgage through its debt service coverage ratio, typically requiring a minimum ratio of 1.0 or higher.
These loans function like traditional mortgages with 30-year terms and competitive rates. They're ideal for investors building rental portfolios in Belmont who want stable, long-term financing without documenting personal income.
Down payments typically range from 20-25% depending on the property and your credit profile. You'll need a decent credit score, usually 640 or higher, and the property must be investment real estate.
Hard money loans provide quick capital based primarily on the property's current or after-repair value. These short-term loans, typically 6-24 months, fund purchases and renovations for fix-and-flip projects or bridge financing needs.
Approval happens in days rather than weeks, and lenders focus on the asset rather than your financial history. This makes hard money ideal when speed matters or when properties need significant work before they can qualify for traditional financing.
Expect higher interest rates and points compared to DSCR loans, reflecting the short-term nature and higher risk. Down payments vary widely but often range from 10-30% of the purchase price or property value.
The loan term separates these options most dramatically. DSCR loans offer 30-year amortization for stable monthly payments, while hard money loans require full repayment or refinancing within 6-24 months.
Interest rates reflect this timeline difference. DSCR loans carry rates similar to conventional mortgages, while hard money loans charge premium rates plus origination points that can reach 2-5% of the loan amount.
Your investment strategy determines which makes sense. Plan to rent the Belmont property long-term? DSCR loans provide affordable, stable financing. Need to buy and renovate quickly before reselling? Hard money gets you in fast.
Choose DSCR loans when you're purchasing rental properties in Belmont that generate consistent income. This works for turnkey rentals or properties needing minor cosmetic updates that won't prevent immediate occupancy.
Hard money makes sense for distressed properties requiring substantial renovation before they're rentable. It's also the right choice when you need to close within days to secure a competitive property in San Mateo County's fast-moving market.
Many investors use both strategically. They'll acquire and renovate with hard money, then refinance into a DSCR loan once the property is rent-ready and stabilized. This combination captures the speed of hard money and the affordability of DSCR financing.
DSCR loans require rental income to qualify, so they don't work for fix-and-flip strategies. Hard money loans are specifically designed for renovation projects where you plan to sell rather than rent.
Hard money loans typically close in 5-10 days. DSCR loans take 21-30 days similar to conventional mortgages, though they skip the employment verification process.
DSCR loans generally require credit scores of 640 or higher. Hard money lenders focus more on the property value and may approve borrowers with lower credit scores.
DSCR loans typically require 20-25% down. Hard money down payments vary widely from 10-30% depending on the lender, property condition, and your experience level.
Yes, this is a common strategy. After renovating with hard money, investors often refinance into DSCR loans once the property is rent-ready and generating income.