Question 1

Can I use DSCR loans for fix-and-flip projects in San Jose?

Accepted Answer

No. DSCR loans require rental income, meaning a tenant-ready property. Hard money funds vacant fixers that won't generate rent during construction.

Question 2

Which loan has lower rates: DSCR or hard money?

Accepted Answer

DSCR rates run 1-2% above agency loans. Hard money hits 9-14%. DSCR costs less but takes three times longer to close.

Question 3

Do hard money lenders care about my credit score?

Accepted Answer

Less than DSCR lenders do. Hard money approval hinges on property value and your exit plan. Expect scrutiny on experience, not FICO.

Question 4

Can I refinance from hard money into a DSCR loan?

Accepted Answer

Yes. Most investors use hard money to acquire and renovate, then refi into DSCR once the property generates rent. Plan for two sets of closing costs.

Question 5

What down payment do San Jose investors need for each loan type?

Accepted Answer

DSCR lenders want 20-25% down. Hard money lenders ask for 10-30% depending on project risk and your track record.

DSCR Loans vs Hard Money Loans in San Jose: Which Investment Strategy Wins?