DSCR Loan or Hard Money

[Josh Dziama]

Hey all,

I'm a new investor trying to buy my first rental property. I was going to go with a conventional loan for a multi-family. However, it will not be my primary residence so I'm looking at a 25% down payment for that loan. This has caused me to try to look for other products out there. I am looking for insight on a DSCR loan or hard money loan to try to get that down payment below 25%.

Thanks

[Nadeem Alamgir]

@Josh Dziama for a non owner occupied multifamily, 25% down on a conventional loan is pretty standard. DSCR loans are an option, but most still require a down payment of 20–25%, and the rates/fees are usually higher than conventional loans. Hard money is more for short term flips or BRRRRs. They'll give you higher leverage, but the terms are expensive and you'll need an exit plan like a refinance.

If your goal is simply to lower the down payment, you can buy a primary residence (house hack a duplex/triplex), you can get in with a down payment of 3.5%. Otherwise, the reality is that most rental loan products are going to want that 20–25% equity in the deal.