Question 1

Can I use DSCR for a property I plan to renovate?

Accepted Answer

Only if it's already rentable. DSCR underwrites current rental income, so major rehabs need hard money first. Refinance to DSCR after renovations are done and a tenant is in place.

Question 2

What credit score do I need for each loan type?

Accepted Answer

DSCR typically requires 660+ credit. Hard money lenders care less about credit and more about equity, sometimes approving borrowers under 600 if the deal has enough cushion.

Question 3

How much does hard money cost compared to DSCR?

Accepted Answer

Hard money runs 8-12% with 2-4 points at closing. DSCR runs 7-9% with standard closing costs. On a 12-month flip, hard money might cost $40K more than DSCR in interest alone.

Question 4

Can I get DSCR financing on a short-term rental?

Accepted Answer

Yes, but lenders analyze Airbnb income more carefully than long-term leases. Expect to provide booking history and higher reserve requirements than traditional rentals.

Question 5

What happens if I can't pay off hard money on time?

Accepted Answer

Most lenders offer extensions at additional cost, but rates may increase. Plan your refinance or sale 60 days before maturity to avoid expensive last-minute extensions.

DSCR Loans vs Hard Money Loans in Portola Valley: Which Investor Loan Fits Your Deal?