DSCR or hard money? Fix with one, hold with the other.
Hard money buys speed for short-term projects. DSCR is built to hold a rental for years. Most Texas investors use both — in that order.
A hard money loan is short-term, asset-based financing — typically 6 to 24 months — used to buy and renovate a property quickly. A DSCR loan is long-term financing, commonly 30 years, that qualifies on the property's rent. The common Texas play: buy and rehab with hard money, then refinance into a DSCR loan once the property is rented.
DSCR loan vs Hard money loan
| DSCR loan | Hard money loan | |
|---|---|---|
| Purpose | Buy or refinance a rental you plan to hold | Short-term purchase, rehab or bridge |
| Term | Commonly 30 years, fixed or ARM | Typically 6–24 months |
| How you qualify | Property rent vs. full payment (the ratio) | Mostly the asset, after-repair value and your exit plan |
| Rate & points | Long-term investor pricing | Materially higher rates, often with origination points |
| Property condition | Generally must be rent-ready | Distressed properties are common |
| Rehab funding | Not typically included | Often funded in draws |
| Speed | Standard investment purchase timeline | Often faster |
| Exit | Hold, or refinance/sell later (watch prepayment terms) | Must refinance or sell before maturity |
General ranges for education only. Terms, rates and eligibility vary by lender and program. Not a commitment to lend.
- —The property is rent-ready or already leased.
- —You plan to hold for years and want predictable payments.
- —You finished a rehab and want to refinance out of a short-term loan.
- —You want to pull cash out of a stabilized rental to buy the next one.
- —The property needs significant work before it can be rented.
- —You need to close faster than a long-term loan allows.
- —You plan to flip and sell within months.
- —You have a clear exit — sale or DSCR refinance — before maturity.
Is a DSCR loan the same as a hard money loan?
No. Both are investor loans that don't rely on your personal income, but hard money is short-term financing for acquisitions and rehabs, while DSCR is long-term financing for rental properties you intend to hold.
Can I refinance a hard money loan into a DSCR loan?
Yes — this is one of the most common uses of DSCR in Texas. Once the property is rehabbed and rented, a DSCR refinance can replace the short-term loan. Seasoning requirements and how value is determined vary by lender and program.
Which is cheaper, DSCR or hard money?
Over any meaningful holding period, DSCR is generally far less expensive. Hard money trades higher rates and points for speed and flexibility on distressed property.
What is the BRRRR method with DSCR?
Buy, Rehab, Rent, Refinance, Repeat. Investors often buy and renovate with short-term financing, place a tenant, then refinance with a DSCR loan to recover capital for the next deal.
Does Mike offer hard money loans?
My focus is long-term financing — DSCR and other investor programs — including the refinance out of your hard money loan. Call me before you close the short-term loan so the exit is planned from day one.
Not sure which fits your deal? Send me the numbers.
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