A hard money (fix and flip) loan is short-term financing to buy and renovate a property, usually for about 12 months. A DSCR loan is long-term financing, up to 30 or 40 years, for a rental that's ready to lease. Use hard money to buy and fix; use a DSCR loan to hold.
Side by side
| Fix & flip (hard money) | DSCR rental loan | |
|---|---|---|
| Best for | Buying and renovating to sell or refinance | Holding a rental long term |
| Term | Usually 12 months, with extensions on many programs | 30- or 40-year fixed, ARMs or interest-only |
| Qualifies on | The deal (price, rehab, after-repair value), credit and experience | The rent compared to the payment (DSCR) and credit |
| Rates (ours) | From 7.75%* | From 5.75%* |
| Leverage (ours) | Up to 90% of purchase and 100% of rehab, within 75% of ARV* | Up to 80% LTV; 75% on cash-out* |
| Rehab funds | Yes, released in draws | No; the property should be rent-ready |
| Income documents | None | None |
*For qualified borrowers. Terms vary by program, credit, experience and property.
When to use a hard money loan
Choose short-term financing when the property needs work before it can sell or rent. The loan covers the purchase and the rehab budget, and you pay it off when you sell or refinance. Speed and flexibility matter more than the rate, because you'll only have the loan for months, not years.
When to use a DSCR loan
Choose a DSCR loan when the property is ready to rent and you plan to keep it. The lower rate and long term keep the payment down, and qualifying on the rent means your personal income doesn't limit how many rentals you own. More in what is a DSCR loan?
Not sure which fits your deal?
Tell us about the property and your plan. We'll recommend the right structure.
Using both: the BRRRR path
Many investors use both on the same property: a fix and flip loan to buy and renovate, then a DSCR loan to refinance once it's rented. Because we offer both, the handoff is simpler. On qualifying programs there's no seasoning required when you move from our bridge loan to one of our rental loans. See BRRRR refinance seasoning.
Frequently asked questions
Is a DSCR loan the same as hard money?
No. Hard money is short-term financing for buying and renovating. A DSCR loan is long-term financing for a rental, qualified on the property's rent.
Can I refinance a hard money loan into a DSCR loan?
Yes. That's the most common exit for investors who keep the property. On qualifying programs, there's no seasoning required when you move from our bridge loan to one of our rental loans.
Which has lower rates, hard money or DSCR?
DSCR loans generally have lower rates because they're long-term loans on stabilized rentals. Our rental loans start at 5.75% and our fix and flip loans at 7.75% for qualified borrowers.