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in Sonoma, CA
Sonoma's wine country real estate attracts investors chasing vacation rentals, fix-and-flips, and long-term holdings. DSCR loans and hard money loans both skip traditional income verification, but they serve completely different investment timelines.
DSCR loans work for stabilized rental properties generating monthly income. Hard money loans fund quick acquisitions and renovations when speed matters more than rate. Your exit strategy determines which loan makes sense.
DSCR loans qualify you based on rental income potential, not your tax returns. Lenders calculate the property's monthly rent divided by its monthly debt payment. A ratio above 1.0 means the property pays for itself.
Rates typically run 1-2% higher than conventional loans, with 15-30 year terms. You need 20-25% down and a 620+ credit score. These work best when you plan to hold the property and collect rent for years.
Hard money loans fund based on property value, not your income or the rent. Lenders care about equity and exit strategy. You get cash in 7-14 days, which beats the 30-45 day timeline for DSCR loans.
Expect rates between 8-12% with 6-24 month terms. Most lenders cap loan-to-value at 65-75% of purchase price or after-repair value. Origination fees run 2-5 points. This is expensive short-term capital for quick moves.
DSCR loans require rental income and longer timelines but offer sustainable rates for multi-year holds. Hard money ignores income entirely and closes fast, but the high cost forces a quick refinance or sale.
DSCR lenders underwrite to 30-year amortization with rates in the 7-9% range. Hard money is interest-only at 8-12% with balloon payments in under two years. One funds patient plays, the other funds time-sensitive deals. Rates vary by borrower profile and market conditions.
Choose DSCR loans when you're buying a turnkey rental or recently renovated property that's ready to lease. Sonoma vacation rentals with established booking history fit perfectly. You need patience for underwriting but get a loan you can carry long-term.
Choose hard money when you're acquiring a fixer at auction, competing with cash buyers, or starting a gut renovation. Time-sensitive purchases in Sonoma's competitive market justify the higher cost. Just have a clear plan to refinance into DSCR or conventional financing within 12-18 months.
Yes, this is the standard investor strategy. Complete renovations, stabilize rental income, then refinance into a DSCR loan with lower long-term rates.
No, lenders care about the property's income potential, not your management history. First-time landlords qualify if the numbers work.
Most lenders offer extensions at additional cost, but rates can spike. Plan your exit before you close the loan.
Yes, many DSCR lenders accept short-term rental income. You'll need booking history or a market rent analysis showing cash flow.
Hard money approves in 1-3 days. DSCR loans take 7-14 days for full underwriting and appraisal.