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in Sonora, CA
Sonora investors face a choice when traditional lenders say no. DSCR loans work for rental holds, while hard money fits fix-and-flips.
Both skip W-2 income requirements. The difference comes down to timeline, cost, and your exit strategy for the property.
Most Tuolumne County investors use DSCR for long-term rentals. Hard money makes sense when you need speed or plan to sell within months.
DSCR loans qualify you on rental income alone. If the property generates enough rent to cover the mortgage payment by 20-25%, you're approved.
Terms run 30 years with rates 1-2% above conventional. You need 20-25% down and a 640+ credit score in most cases.
This works for Sonora investors buying turnkey rentals or properties already occupied. The property has to be rent-ready at closing.
Hard money lenders fund based on property value, not income or credit. They'll close in 7-14 days if you need to move fast on a deal.
Expect 9-13% rates with 2-4 points upfront. Terms run 6-24 months, and you'll put down 25-35% depending on the property condition.
These loans shine when you're buying distressed Tuolumne County properties. Lenders fund based on after-repair value, not current condition.
DSCR costs less but takes 30-45 days to close. Hard money costs 4-6% more annually but closes in under two weeks.
DSCR requires rent-ready property and longer commitment. Hard money works on fixer-uppers but you must refinance or sell within two years.
Credit matters for DSCR—you need 640 minimum. Hard money cares more about equity and exit strategy than your FICO score.
Choose DSCR when buying a rental you'll hold long-term. The lower rate matters more than closing speed if you're building a portfolio.
Pick hard money for fix-and-flips or when you're competing with cash buyers in Sonora. Speed wins deals in competitive situations.
Some investors start with hard money, then refinance to DSCR after renovations. This strategy works when buying distressed properties below market value.
No. DSCR loans require rent-ready properties. If it needs major repairs, start with hard money and refinance to DSCR after renovations.
Hard money runs 9-13% plus 2-4 points. DSCR sits around 7-8% with lower fees. On a $300K loan, that's roughly $15K more per year.
DSCR lenders usually want investment experience. Hard money cares more about the deal and your equity. New investors often start with hard money.
Hard money doesn't care about foreclosures. DSCR lenders typically want 2-4 years since any major credit event, similar to conventional loans.
DSCR requires 20-25% down. Hard money asks for 25-35%, more if the property needs heavy rehab work.