If you’re a real estate investor seeking financing outside the conventional bank system, you’ve likely encountered both hard money loans and DSCR loans. They’re both non-QM products, but they serve very different purposes.
Hard Money Loans: Speed Over Everything
Hard money loans are short-term, asset-based loans used primarily for:
- Fix-and-flip projects
- Bridge financing (buying before your current property sells)
- Distressed properties that conventional lenders won’t touch
- Situations requiring fast closing (5–10 business days)
Key characteristics:
- Term: 6–24 months (short-term)
- LTV: Up to 90% of purchase price + 100% of rehab
- Rate: Higher than DSCR (offset by speed and flexibility)
- Exit strategy: Sale or refinance into longer-term loan
- Credit: Less strict — property value and deal merit matter most
DSCR Loans: Long-Term Hold Financing
DSCR loans are designed for buy-and-hold investors who want to refinance into a stable, long-term loan after renovations are complete. They qualify based on the property’s rental income.
Key characteristics:
- Term: 30-year fixed, ARM, or interest-only
- LTV: Up to 80% purchase, 75% cash-out
- Rate: Lower than hard money (long-term stability)
- Qualifying: Based on property rent, not personal income
- Use case: Stabilized rental properties generating income
The Investment Property Playbook
Many successful investors use both products sequentially:
- Step 1: Acquire and renovate with a hard money loan (fast closing, high LTV)
- Step 2: Stabilize the property (find tenants, establish rental income)
- Step 3: Refinance into a DSCR loan (lower rate, long-term, cash-out equity)
This “BRRRR” strategy (Buy, Rehab, Rent, Refinance, Repeat) works well when you have a lender who handles both products.
We Do Both — And We Close Fast
We fund both hard money and DSCR loans for real estate investors in Texas and nationwide. Whether you’re flipping a distressed property or building a rental portfolio, we can help.
See our Hard Money program | See our DSCR Loan program | Get a free quote