They do different jobs. A hard money loan buys and fixes a property fast and is meant to be repaid within months; a DSCR loan is long-term financing for a property that rents. Many investors use both, one after the other.
Side by side
| DSCR loan | Hard money loan | |
|---|---|---|
| Term | Long-term, often 30 years | Short-term, often 6 to 24 months |
| Purpose | Holding a rental | Buying, fixing and selling or refinancing |
| How you qualify | The property’s rent against its housing cost | The property’s value, often its value after repairs, and your plan |
| Rehab funds | No | Often, released in draws |
| Speed | A few weeks | Can close in days |
| Cost | Lower rate, standard closing costs | Higher rate plus points |
| Prepayment penalty | Common, and negotiable | Usually none or short |
When a DSCR loan fits
- The property is rented, or ready to rent.
- You plan to hold it for years.
- You want a lower rate and a long-term payment.
When a hard money loan fits
- The property needs work before it can rent or sell.
- You need to close very fast.
- You plan to sell after the work, or refinance into a DSCR loan.
Guides and calculators
- DSCR investor loans
- DSCR calculator
- Refinance out of a hard-money or bridge loan
- Rehab & code case loans
- Private and short-term lenders
Questions
Is a DSCR loan a hard money loan?
No. A DSCR loan is long-term financing with standard terms, qualified on rent. Hard money is short-term, priced higher and based mainly on the property’s value and your plan.
Can I refinance a hard money loan into a DSCR loan?
Yes, and it’s the most common exit for a finished rental. Many DSCR lenders want a few months of ownership before they use the new appraised value.
Which is cheaper, DSCR or hard money?
DSCR, by a wide margin over time. Hard money’s cost is the price of speed, rehab funds and flexibility for a short hold.
