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in Gilroy, CA
Gilroy investors face a choice between DSCR and hard money loans, two non-QM products that ignore W-2 income. DSCR loans work for cash-flowing rentals you plan to hold. Hard money suits quick flips or properties needing major rehab.
Both skip traditional income verification, but the terms differ drastically. DSCR offers lower rates for long-term holds. Hard money provides speed and flexibility for short-term plays. Your timeline and property condition determine which makes sense.
DSCR loans qualify based on rental income divided by the mortgage payment. You need a ratio above 1.0, meaning rent covers the loan. No tax returns, no pay stubs. The property's cash flow is your income proof.
Rates run 1-2% above conventional, typically 7-9% as of February 2026. You'll need 20-25% down and a 620+ credit score. Terms stretch 30 years, making this a buy-and-hold product. We close in 3-4 weeks once appraisal and rent analysis clear.
Hard money lenders care about one thing: property value. They'll lend 65-75% of after-repair value on a flip or distressed property. Credit matters less than equity. Some lenders approve deals with 550 scores if the numbers work.
Rates start at 9% and climb to 12%+ depending on risk. Points range from 2-4% of the loan amount. Terms run 6-12 months, not years. You pay interest-only and refinance or sell before the balloon comes due. We close in 7-14 days when speed matters.
Rate and term structure separate these products completely. DSCR gives you conventional-style 30-year amortization at 7-9%. Hard money charges 9-12%+ with a 12-month balloon. That difference costs thousands monthly on a $500K loan.
Approval criteria flip the script too. DSCR requires stable rental income and decent credit. Hard money requires equity and an exit plan. If Gilroy property needs six months of work before tenants move in, DSCR won't approve it. Hard money will.
Choose DSCR if you're buying a turnkey rental in Gilroy and holding long-term. The lower rate and stable term let you cash flow from day one. You need a property that can rent immediately and cover its debt service.
Choose hard money if you're flipping or the property needs major rehab before tenants move in. Speed and flexibility justify the higher cost when you're selling in six months. Also use hard money when credit issues block DSCR approval. Just have your exit strategy locked before you close.
Yes, that's a common strategy. Fix the property with hard money, get tenants in, then refinance to DSCR for long-term hold. We structure both loans from the start.
DSCR if it's rent-ready and cash flows above 1.0 ratio. Hard money if it needs work first. Check if current rents cover the DSCR payment before choosing.
Yes, most DSCR lenders want 6-12 months of reserves per property. Hard money typically requires less since the term is so short.
DSCR typically requires 620 minimum. Hard money can go as low as 550 if you have enough equity and a solid exit plan.
Yes, if you have equity and an exit strategy for each. Hard money lenders evaluate each property individually. Portfolio size matters less than deal quality.