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DSCR Loan vs Hard Money Loan

Long-term rental financing versus short-term project capital.

These two solve different problems. A DSCR loan is long-term financing for a rental you intend to hold, qualified on the property's cash flow. A hard money loan is short-term, asset-based capital for a project, like a flip or a bridge, that you plan to exit quickly. Many investors use both: hard money to acquire and renovate, then a DSCR loan to refinance and hold.

DSCR Loan
Buy-and-hold rentals
Hard Money Loan
Flips, bridges, short-term
Loan purpose
Long-term rental hold
Short-term project or bridge
Typical term
30-year amortization
6 months
Qualifies on
Property rent vs. payment (DSCR)
The asset and the deal
Payment type
Principal and interest
Usually interest-only
Speed to close
Days to a couple weeks
As few as 5 to 7 days
Best for
Stabilized, rented properties
Distressed or value-add deals
Bottom line

If the property is rented and you plan to hold it, a DSCR loan is the lower-cost long-term option. If you are buying to renovate or need to move fast, hard money gets you in, then refinance into a DSCR loan once it is stabilized.

Rates and terms shown are typical figures, subject to underwriting and market conditions. Not a commitment to lend.

Free calculatorDSCR CalculatorSee if your rental cash-flows before you apply.Open
Related program
Rental / DSCR
Long-term financing that qualifies on the property.
Read the guide
What Is a DSCR Loan? How Investors Qualify on Rental Income
A DSCR loan qualifies on a rental's income, not your tax returns. How DSCR is calculated, what ratio you need, and when it beats a conventional loan.

Common questions

Which one should I use if I plan to keep the property?
DSCR, once the property can carry itself. Hard money is built for a short hold with a defined exit, on our fix and flip terms a 6 month interest-only loan. A DSCR loan is the long-term instrument, on a 30-year fixed or a 5, 7 or 10 year ARM. If the property is rentable today, going straight to DSCR skips a closing and a set of costs.
What credit score does each need?
640 on DSCR. On hard money, credit is a pricing input rather than a gate. DSCR is long-term paper, so the score affects both your rate and your leverage. Hard money underwrites the asset, the equity and your exit, so weaker credit can often be offset with lower leverage. Neither runs a personal income test or asks for tax returns.
Can I use both on the same property?
Yes, and it is the standard BRRRR sequence. Buy and renovate on hard money, which funds up to 90% of purchase and 100% of rehab. Rent it. Then refinance into a DSCR loan at up to 80% LTV once it covers its payment. We fund both legs, so the exit is underwritten at the start rather than left to find later.
Can I refinance a hard money loan into a DSCR loan?
Yes, and it is a very common path. Investors use hard money to buy and renovate, then refinance into a long-term DSCR loan once the property is rented and stabilized, often pulling cash back out in the process.
Is hard money higher-cost than a DSCR loan?
Per month, usually yes, because hard money prices in speed and short-term risk. But you only hold it briefly. A DSCR loan has a lower rate because it is a long-term, lower-risk loan on a stabilized property.

Related comparisons

Bridge Loan vs DSCR LoanShort-term capital to reposition, then long-term money to hold.DSCR Loan vs Conventional LoanQualify on the property, or on your personal income.Hard Money vs Conventional LoanSpeed and flexibility versus the lowest-cost long-term money.

Still not sure which fits?

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