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in Rio Vista, CA
Rio Vista investors have two main options when personal income won't work for underwriting. DSCR loans use rental income to qualify. Hard money lenders focus on the property itself.
Both loans skip W-2 verification, but they serve different investor strategies. DSCR works for cash-flowing rentals. Hard money handles rehabs and quick closings.
Your timeline and property condition determine which makes sense. DSCR gives you 30-year terms at lower rates. Hard money gets you funded in days, not weeks.
DSCR loans qualify you based on what the property makes, not what you earn. Lenders want a debt service coverage ratio of 1.0 or higher—meaning rent covers the mortgage payment.
You get 30-year fixed terms with rates typically 1-2% above conventional. Expect 20-25% down and a credit score minimum around 660.
These work for investors with rental portfolios who want long-term financing. You need an existing tenant or market rent appraisal to prove cash flow.
Hard money lenders fund based on the property's after-repair value, not your financials or the rent. They move fast—approvals in days, funding in 1-2 weeks.
Terms run 6-24 months with rates from 9-14%. You pay points upfront, usually 2-4%. Loan-to-value maxes out at 65-75% of ARV.
This is bridge financing for flips, heavy rehabs, or properties that don't qualify elsewhere. You need a clear exit strategy—refinance or sale—before the term ends.
Rate and term structure separates these completely. DSCR gives you 6-8% rates for 30 years. Hard money hits 10-13% but only for 12 months.
DSCR needs a property that's rent-ready or already leased. Hard money funds distressed properties that won't appraise for traditional loans.
Closing speed matters for competitive Rio Vista deals. DSCR takes 3-4 weeks. Hard money closes in under 10 days when you need to move fast.
Cost structure differs too. DSCR has standard closing costs. Hard money adds 2-4 points upfront, making it expensive if you hold long-term.
Use DSCR when you're buying a rental that's already fixed up or needs minor work. You want long-term financing and the property generates enough rent to hit a 1.0 ratio.
Choose hard money for flips, major renovations, or when you need to close in days to win a deal. You're planning to refinance or sell within 12-18 months.
Don't use hard money as permanent financing—the rates will eat your returns. And don't try DSCR on a property that needs $80K in repairs before it rents.
Rio Vista's smaller investor market means having both options lined up gives you flexibility. Some deals need speed. Others need sustainable long-term debt.
Yes, that's a common strategy for value-add deals. Just factor refinance costs into your budget and make sure the finished property will hit DSCR requirements.
Hard money has lower qualification barriers—mainly property value and exit plan. DSCR requires decent credit and verifiable rental income.
DSCR works great for 2-4 units. Hard money does too, but most lenders cap at 4 units and focus on single-family rehabs.
DSCR lenders want 660-680 minimum. Hard money lenders care less about credit—some approve borrowers in the 500s if the deal works.
DSCR lenders will require flood insurance but still approve. Hard money varies by lender—some avoid flood zones entirely.