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in Loyalton, CA
Loyalton investors face a choice between two non-traditional financing paths. DSCR loans use rental income to qualify, while hard money lenders care only about the property's value.
Both skip W-2 income verification and tax returns. But they serve completely different strategies — one for long-term holds, the other for fast flips or urgent acquisitions.
Most borrowers misunderstand when to use each loan type. Picking wrong costs thousands in unnecessary interest or kills deals that need fast closings.
DSCR loans let you buy rental properties using the property's income to qualify. Lenders divide monthly rent by monthly debt payment — ratios above 1.0 typically get approved.
Terms run 30 years with fixed or adjustable rates. You need 20-25% down and a 620+ credit score minimum, though higher scores get better pricing.
These loans work for investors building rental portfolios. Rates run 1.5-3% above conventional mortgages, but you avoid income documentation entirely.
Loyalton's small rental market means lenders scrutinize comps carefully. You'll need strong rental comparables to justify your projected income assumptions.
Hard money lenders fund based on property value, not your financials. They lend 65-75% of after-repair value and close in one week when deals demand speed.
Expect 9-14% interest rates plus 2-4 points upfront. Terms run 6-24 months — these aren't loans you carry long-term.
Fix-and-flip investors use hard money when conventional timing kills deals. You can also bridge gaps between property sales or fund renovations before refinancing.
In Loyalton's limited inventory market, cash-equivalent speed matters. Hard money turns you into a cash buyer who can close before competitors finish their appraisal.
DSCR loans cost less but take 30-45 days to close. Hard money costs double but funds in one week — you're paying for speed and flexibility.
DSCR requires the property to cash flow from day one. Hard money doesn't care if the place sits vacant during your three-month renovation.
DSCR lenders want strong credit and reserves. Hard money lenders focus on your exit strategy and equity position — credit scores matter less.
Use DSCR when you're buying a turnkey rental to hold. Use hard money when timing matters more than cost or you're planning major renovations before stabilization.
Choose DSCR if you're buying a rental property you plan to hold for years. The lower rate saves tens of thousands over time, and the 30-year term matches long-term ownership.
Pick hard money when you're flipping properties, facing foreclosure timelines, or need to close before selling your current property. Speed and flexibility justify the cost premium.
Some Loyalton investors use both strategically — hard money to acquire and renovate, then refinance into DSCR once the property stabilizes and produces rental income.
Most mistakes happen when borrowers use hard money for long holds or try DSCR on properties that can't generate sufficient rent. Match the loan to your actual timeline and strategy.
No, DSCR lenders require rental income from day one. Hard money is built for renovations where the property doesn't generate income during construction.
DSCR loans cost less — typically 1-2% of loan amount. Hard money charges 2-4 points upfront plus higher rates that compound the total cost.
Yes, both are designed for investors. Neither requires you to live in California or occupy the property — investment properties only.
Absolutely. Many investors use hard money to buy and renovate, then refinance to DSCR once the property is rented and stabilized.
Hard money is easier — lenders care about property value and your exit plan. DSCR requires decent credit, reserves, and proven rental income coverage.