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in Tulelake, CA
Tulelake investors face a choice between two non-QM financing paths. DSCR loans qualify you on rental income, while hard money loans fund based on property value alone.
Your timeline and exit strategy determine which works better. DSCR suits long-term rentals, hard money fixes quick flips and rehabs.
Both skip W-2 verification, but they differ dramatically on rates, terms, and use cases. Know the tradeoffs before you commit capital.
DSCR loans qualify on rental income divided by mortgage payment. A 1.0 ratio means rent covers the full payment—many lenders want 1.15 or higher.
You get 30-year fixed terms with rates typically 1-2% above conventional. No tax returns, no pay stubs—just the property's income potential.
Expect 20-25% down minimum. The property must generate enough rent to support the loan, which works well in Tulelake's rural rental market.
These loans close in 3-4 weeks. You can hold the property indefinitely without a forced sale or refinance deadline.
Hard money lenders fund based on property value, not income. They lend 65-75% of after-repair value for fix-and-flip deals.
Rates run 9-14% with 2-4 points upfront. Terms span 6-24 months—you must sell or refinance before maturity.
Approval happens in days, funding in 1-2 weeks. Speed matters when you're competing for distressed properties in rural markets.
These loans fit rehabs and quick flips. The high cost only makes sense if you exit fast or the deal can't wait.
Cost separates these loans sharply. DSCR runs 7-9% for 30 years; hard money hits 9-14% for under two years with points you pay at closing.
Timeline matters more than rate sometimes. Hard money closes in a week when you need to grab a deal. DSCR takes a month but costs far less to carry.
Exit strategy drives the decision. DSCR works when you plan to hold and rent. Hard money fits flips, rehabs, or bridge financing until you can refinance.
Down payment differs too. DSCR wants 20-25% of purchase price. Hard money lends on after-repair value, sometimes funding the full purchase if equity exists post-rehab.
Choose DSCR if you're buying a rental to hold. The lower rate and long term let you cashflow the property without a ticking clock.
Pick hard money when speed or condition matters. Distressed properties, auction buys, or quick flips all justify the higher cost if your profit margin supports it.
Some Tulelake investors use both strategically. They buy with hard money, complete rehab, then refinance into DSCR to hold as a rental long-term.
Run the numbers on your specific deal. A flip with $40k profit absorbs hard money costs easily. A rental held five years gets crushed by those same rates.
No, DSCR requires rental income to qualify. You need a tenant in place or a lease agreement showing market rent covers the payment.
Most want 600+ but focus more on equity and exit strategy. A strong deal with low LTV can overcome weaker credit.
You must refinance or face default. Some lenders offer extensions for fees, but don't count on it—have an exit plan before closing.
Yes, lenders use market rent estimates from appraisals. You don't need existing tenants or lease history to qualify.
DSCR suits rural rentals well if rents support the payment. Hard money fits any property type but makes most sense for quick value-add plays.