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in Santa Rosa, CA
Santa Rosa investment properties need different financing than owner-occupied homes. DSCR loans use rental income to qualify, while hard money lenders focus on the property's value and exit strategy.
Most Sonoma County investors use DSCR for stable rental holds and hard money for fix-and-flip deals. Your timeline and project type determine which loan makes sense.
DSCR loans approve based on a property's monthly rent divided by its monthly debt payment. If rent is $3,000 and your payment is $2,500, your ratio is 1.2 — most lenders want 1.0 or higher.
These are 30-year mortgages with rates typically 1-2% above conventional loans. You can close in 2-3 weeks without tax returns or W-2s, making them ideal for self-employed investors.
DSCR works best for turnkey rentals or light rehabs in Santa Rosa's established neighborhoods. You need 20-25% down and a credit score around 640 minimum.
Hard money lenders fund based on after-repair value, not your income or credit. They'll lend up to 70-75% of what the property will be worth after renovations, often covering both purchase and rehab costs.
These are short-term loans with 6-24 month terms and rates from 8-12%. Closing happens in days, not weeks, which matters when competing for distressed properties in Sonoma County.
Hard money fits aggressive rehab projects or time-sensitive acquisitions. Expect 2-4 points in origination fees and higher monthly payments than DSCR loans.
DSCR loans cost less but take longer. Hard money costs more but closes faster and funds construction. A DSCR loan at 7.5% for 30 years beats hard money at 10% for 12 months only if you're holding the property.
DSCR requires the property to cash flow on day one. Hard money doesn't care about current condition or rent — lenders look at projected value after your improvements are complete.
Credit matters more for DSCR. Most DSCR lenders want 640-680 minimum scores, while hard money lenders will fund deals at 600 if the property and exit plan are solid.
Use DSCR when buying a rental property you plan to hold for years. Santa Rosa single-families that already rent or need minor cosmetic work are perfect DSCR candidates.
Use hard money for major rehabs or when you need to close in under two weeks. If you're buying a fire-damaged property in Rincon Valley to flip in six months, hard money makes sense despite the higher cost.
Some investors start with hard money, complete renovations, then refinance into a DSCR loan. This strategy works well for properties that don't currently meet DSCR rent requirements.
DSCR loans don't work for flips because they require immediate rental income. You need hard money for properties that won't generate rent during your hold.
Hard money typically wants 25-30% down on the purchase price. DSCR loans need 20-25% down but don't fund construction costs separately.
Higher-value properties favor DSCR because hard money rates compound faster. A $900K rental pays less total interest with DSCR over time.
Yes, neither requires tax returns or W-2s. DSCR qualifies on rent, hard money qualifies on property value and your exit plan.
Most hard money lenders fund in 5-7 business days once you have a purchase contract. Some can close in 3 days for strong deals.