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in Dixon, CA
Dixon's rental market attracts investors who need financing without W-2 income verification. Both DSCR and hard money loans skip traditional income docs, but they serve very different strategies.
DSCR loans work for buy-and-hold investors who want long-term rental income. Hard money loans fit fix-and-flip projects or properties that need major work before they can qualify for permanent financing.
DSCR loans qualify you based on rental income, not your tax returns. The property's monthly rent must cover 1.0x to 1.25x of the mortgage payment, depending on the lender.
You get 30-year fixed terms with rates typically 1-2% above conventional loans. Most lenders require 20-25% down and a 620+ credit score. These loans work for turnkey rentals or properties that need minor cosmetic updates.
Hard money loans focus on the property's after-repair value, not your income or credit. You can close in 7-14 days with minimal documentation. Most lenders fund 70-90% of purchase price plus some rehab costs.
Terms run 6-24 months with rates from 9-14%. You pay points upfront, usually 2-4% of the loan amount. This is bridge financing — you refinance into a DSCR or conventional loan once the property is rent-ready or sell after renovations.
DSCR loans cost less but need cash flow today. Hard money loans cost more but work for properties that can't rent yet. Dixon has older homes near downtown that often need hard money first, then refinance to DSCR once renovated.
Rate difference is significant. DSCR loans run 7-9% with no points. Hard money runs 9-14% plus 2-4 points upfront. On a 400K loan, hard money costs you 8K-16K in points before you make the first payment.
Choose DSCR if you're buying a rental that's already habitable and can generate rent within 60 days. Most single-family homes in Dixon's newer neighborhoods qualify if they're in decent shape and command market rent.
Choose hard money if the property needs major repairs, has code violations, or won't appraise in current condition. Also use it when you need to close fast — competing with cash buyers or buying at auction. Plan your exit before you close. Most investors refinance to DSCR or sell within 12 months.
You can, but you'll overpay. Hard money rates are 4-6% higher than DSCR. Close with hard money only if the property needs work before it qualifies for a DSCR loan.
DSCR lenders want 620+ credit and clean mortgage history. Hard money lenders care more about equity — some approve borrowers with 550 credit if the deal has enough cushion.
DSCR loans take 25-35 days like a conventional loan. Hard money closes in 7-14 days, sometimes faster if you pay rush fees.
Both require appraisals. DSCR uses current value. Hard money uses after-repair value (ARV), requiring a detailed scope of work and contractor bids.
Yes, this is common. Complete the rehab, place a tenant, then refinance to DSCR once you have six months of rental income documented.