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in Tulare, CA
Tulare investors face a choice between two non-QM options that skip traditional income verification. DSCR loans underwrite on rental income while hard money lends against property value.
Both work when conventional loans don't, but they serve different timelines and strategies. DSCR suits long-term rental holds while hard money finances fast flips and rehabs.
Most Tulare investors use hard money to acquire distressed properties, then refinance into DSCR for permanent financing. Understanding when to use each saves thousands in interest.
DSCR loans qualify based on whether rent covers the mortgage payment. Lenders calculate debt service coverage ratio by dividing monthly rent by the full PITIA payment.
You need a ratio above 1.0 for best pricing, though some lenders go to 0.75 with compensating factors. Rates run 1-2% above conventional, with 15-30 year fixed terms available.
No tax returns, no W-2s, no employment verification required. Credit scores start at 620 but 680+ gets better rates and terms in Tulare County.
Down payments range from 20-25% for single-family rentals. Cash-out refinances work too if the property generates sufficient rental income to meet DSCR requirements.
Hard money lends primarily on property value, not borrower qualifications. Lenders care about the asset's current worth and after-repair value more than your credit score.
Rates run 8-12% with 2-5 points upfront. Terms last 6-24 months since these are bridge loans for acquisitions, renovations, or time-sensitive deals.
Approvals happen in days, not weeks. Funding closes in 5-10 business days when Tulare deals require speed that conventional timelines can't match.
Loan-to-value caps at 65-75% of purchase price or ARV. Some lenders fund rehab costs in draws as work completes on fix-and-flip projects.
Cost separates these loans dramatically. DSCR rates sit in the 7-9% range while hard money hits 10-12% plus points, making monthly payments double on the same property.
Timeline drives the choice. DSCR works for rental properties you plan to hold long-term while hard money finances short flips and rehabs with defined exit strategies.
Qualification standards differ completely. DSCR underwrites rental income and requires 620+ credit while hard money focuses on equity and asset value with minimal credit requirements.
Loan amounts vary by approach. DSCR lends based on purchase price and rent while hard money calculates LTV on current value or after-repair value for renovation projects.
Choose DSCR when you're buying turnkey Tulare rentals to hold for years. The lower rate and long-term structure make sense when cash flow matters more than speed.
Use hard money for distressed properties needing work, competitive offers requiring fast closes, or short-term flips. The cost premium buys speed and flexibility conventional loans can't provide.
Many investors combine both products strategically. They buy and renovate with hard money, then refinance into DSCR once the property is rent-ready and generating qualifying income.
Your timeline decides everything. Holding over two years almost always favors DSCR despite harder qualification requirements since interest savings exceed any upfront cost differences.
No, DSCR loans require rental income to qualify and work for long-term holds only. Hard money finances flips since you'll sell before the property generates rent.
Hard money closes in 5-10 days versus 30-45 days for DSCR. Speed costs more but wins competitive offers when sellers need quick closes.
Neither requires W-2s or tax returns. DSCR qualifies on rental income while hard money lends primarily on property value and equity.
DSCR loans require 620 minimum, preferably 680+. Hard money lenders accept scores as low as 550-600 since they focus on asset value.
Yes, this is a common strategy. Complete renovations with hard money, establish rental income, then refinance to DSCR for permanent lower-rate financing.
DSCR loans go to 75-80% LTV while hard money caps at 65-75%. DSCR requires less cash down but takes longer to close.