I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
Both hard money loans and conventional investment property loans can finance real estate — but they’re built for completely different situations. Using the wrong one costs you deals or money. Here’s the full comparison so you can choose intelligently. See also: California Hard Money Loans and DSCR Loans California.
Side-by-Side Comparison
| Feature | Hard Money Loan | Conventional Investment Loan |
|---|---|---|
| Closing Time | 7–14 days | 30–60 days |
| Interest Rate | 9% – 13% | 7% – 8.5% |
| Loan Term | 6–24 months | 15 or 30 years |
| Income Verification | Not required | Required (W-2/tax returns) |
| Credit Score | No minimum | Typically 680+ |
| Property Condition | Distressed OK | Must be habitable/rentable |
| Max Financed Properties | Unlimited | 10 (Fannie/Freddie cap) |
| Down Payment | 20–35% | 20–25% |
| Best For | Fix & flip, bridge, speed | Long-term rental holds |
When to Use Hard Money
Use hard money when speed is the deal. If a seller wants to close in 10 days and you’re competing against cash buyers, conventional financing loses before the race starts. Hard money lets you move as fast as cash while keeping your liquidity intact.
Use hard money for distressed properties. Conventional lenders won’t touch a property without a working kitchen or HVAC. Hard money lenders care about the after-repair value, not the current state of the property.
Use hard money when you own too many properties. Fannie Mae caps conventional investment loans at 10 financed properties. Hard money has no such limit — experienced investors with 20+ properties still access hard money financing easily.
When to Use Conventional Financing
Use conventional when you’re holding long-term. A 30-year conventional mortgage at 7.5% is dramatically cheaper than carrying a hard money loan at 10.5% for years. Hard money is a tool, not a long-term strategy.
Use conventional when time isn’t a factor. If you have 45–60 days and a stabilized, rent-ready property, conventional financing saves you 2–3 points and a significantly lower rate.
The Smart Investor Playbook: Use Both
The most sophisticated California investors use hard money and conventional financing together: acquire distressed properties with hard money (fast close, no condition requirements), renovate and stabilize, then refinance into a DSCR loan at a lower long-term rate. You capture the deal with speed and private capital, then optimize your financing once the value is created. This “buy-fix-refi-repeat” strategy has built more California real estate portfolios than any other approach. I offer both hard money and DSCR financing and can help you find the right structure for your investment strategy — including the handoff from one to the other.
Frequently Asked Questions
What’s the main difference between a hard money loan and a conventional investment loan?
The core difference is underwriting: hard money is asset-based (the lender evaluates the property’s value, not your income or credit score), while conventional investment loans are income-based (the lender evaluates your debt-to-income ratio, credit score, and employment history). Hard money closes in 7–14 days with no income docs; conventional takes 30–60 days with full documentation. Hard money rates run 9–13%; conventional runs 7–8.5%. Hard money is the right tool for fast closings, distressed properties, and situations where income or credit is a limiting factor. Conventional is right for long-term holds on rent-ready properties where you have time and clean documentation.
Can I use both hard money and conventional financing as a California investor?
Yes — and the most effective California investors do exactly this. The strategy is to use hard money to acquire and renovate distressed properties quickly, then refinance into a DSCR loan once the property is stabilized and tenanted. Hard money’s higher rate and short term are appropriate for the acquisition and renovation phase; a 30-year DSCR loan’s lower rate is appropriate for the long-term hold. I help investors execute both phases — the hard money acquisition and the DSCR refinance — so you’re not scrambling to find a different lender mid-project. Call me to run the numbers on your specific deal before you make an offer.
What happens when I hit the 10-property Fannie Mae limit?
Fannie Mae and Freddie Mac cap conventional investment financing at 10 financed properties per borrower. Once you hit that limit, conventional lenders are closed to you for additional investment properties. Your options include DSCR loans (portfolio loans that don’t count against the Fannie limit and have no cap on number of financed properties), hard money for acquisitions you’ll renovate and sell, and portfolio lenders who make their own rules. I specialize in helping California investors who have reached or are approaching the conventional financing cap — DSCR loans are specifically designed for exactly this situation.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
