The Quick Read: Hard money fits an investor who needs a short bridge on a property that is not yet rentable. A DSCR refinance fits a property that already rents and covers its full payment. Both paths hinge on one fact: the new lender needs legal title delivered at closing.
- Hard money is short-term, interest-only, and underwritten mainly on the property, the plan, and the exit.
- A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
- A land contract buyer usually holds equitable title only, so the seller’s deed has to move at the same closing.
- Hard money is usually a bridge, so a second closing and second round of title work often follow.
- A DSCR payoff can end in long-term debt in one step, if the property and the seasoning rules cooperate.
Side-by-Side
The table below describes the hard money column by published industry norms. Lendmire’s wholesale network places both products. Programs vary by lender, property, and borrower experience, and nothing here is a commitment to lend.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Property value, balance, taxes, and insurance are editable estimates. Maximum loan-to-value varies by lender, program, property type, and seasoning. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
| Factor | Hard Money Payoff | DSCR Refinance Payoff |
|---|---|---|
| Review basis | Property value, plan, and exit | Property rent vs. full monthly obligation |
| Documentation | Generally lighter, asset-focused | Lease or rent evidence, appraisal, entity papers |
| Property condition | Can be unfinished or vacant | Rentable and leasable, generally |
| Property types | Non-owner-occupied 1-4 units | Rental property; some types not offered |
| Entity vesting | Commonly an LLC | Subject to lender program eligibility |
| Term | Short, interest-only | Long-term structures |
| Reserves | Vary by lender and experience | Commonly around 6 months of PITIA |
| Main failure mode | Maturity arrives before an exit | Rent too thin, or seasoning not met |
Why a Land Contract Changes the Question
A land contract is not a normal payoff. The CFPB’s contract-for-deed report describes these as loans where the seller keeps legal title until the buyer finishes the payments. The same report notes that title defects can limit a buyer’s ability to take title or later sell.
That sets the file’s spine. A new first-lien lender, hard money or DSCR, needs the borrower to hold legal title, or to receive it at the same closing. The contract balance goes to the seller through the title company, the seller’s interest is released, and the deed is delivered when the new lien is recorded.
Two checks come before any financing choice. First, confirm the contract allows early payoff, because not all do. Second, find out whether the seller still owes an underlying mortgage. UpCounsel flags that if the seller defaults on that mortgage, the buyer can lose the property. A seller lien can stall either path.
Recording the contract does not fix this. A recorded memorandum gives public notice of the buyer’s interest. It does not make the buyer the legal owner.
When Hard Money Is the Better Fit
Hard money is the better fit when the property cannot yet pass a rent test, or when the balloon date is close. Think of a vacant property that needs work before it can be leased. A DSCR lender wants a rentable property with rent evidence. A hard money lender looks at the value, the plan, and the exit.
Across the network, hard money programs for this kind of file typically run on these parameters. Cash-out and rate-and-term refinances reach up to 65% of value. Bridge purchases without rehab reach up to 80% of purchase price. Terms run 6-18 months, interest-only, with no prepayment penalty. Credit starts around 620, with added conditions below 660. Collateral is non-owner-occupied residential, 1-4 units. All of this varies by lender, property, and experience, and none of it is a promise.
Notice the lower refinance ceiling. A land contract payoff is a refinance, so the 65% of value figure is the one that applies. That leaves more equity to bring to the table than a DSCR cash-out would.
Hard money also suits a borrower who needs to take title to a property that is not yet stabilized. The loan buys time. It does not solve the long-term debt question, and it adds a second closing later.
When a DSCR Refinance Is the Better Fit
A DSCR refinance is the better fit when the property already rents, the rent covers the full payment, and the balloon leaves enough runway. One closing pays off the seller and puts long-term debt in place. That means one round of title work, one appraisal, and one set of closing costs.
On most DSCR files in the network, a payoff-only refinance can reach up to 85% LTV on rate-and-term. If cash comes back, it becomes a cash-out, capped at 75% LTV. Many programs expect about 6 months of seasoning before cash-out, measured from title recording. On a land contract, the clock may run from the date title actually transfers, not from the contract’s recording date. Programs count it differently, so ask early.
Coverage starts at 1.00 on select programs. That is a floor for those programs, not a universal standard. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. Credit tiers run 620, 660, 680, and 700, with a 620 floor. Reserves are commonly around 6 months of PITIA, stepping up to about 9 months above $1,500,000. Standard programs go up to $3,000,000.
Clearing 1.00 is not the same as positive cash flow. The ratio compares rent to PITIA only. Repairs, vacancy, management, and utilities sit outside it.
Two property cautions. Manufactured homes, log homes, and barndominiums are not offered in the DSCR programs. And if you plan to vest title in an LLC, that is subject to lender program eligibility. Vest in the target entity at the refinance. A transfer afterward can trigger the due-on-sale clause.
Where the Files Break
On land contract payoffs, files rarely fail on the loan math. They fail on the paper.
- Seller cooperation. The seller has to be willing and able to deliver clear title. A seller who is unreachable, has liens, or has died turns a routine payoff into a title problem.
- Payoff statement. Get the seller’s written balance and per diem early. The wire goes through the title company.
- Related-party notes. Family or pooled notes get extra scrutiny of the paper.
- Appraisal gap. If value comes in light, leverage caps shrink the loan. Whichever of rent or value is lower governs.
- Second closing. A hard money payoff followed by a DSCR take-out means double the title and appraisal work. Treat that cost as real, even though this article cannot price it.
Decision Table
| Your situation | Likely path | First move |
|---|---|---|
| Property vacant or needs work | Hard money, then DSCR | Confirm seller will deliver the deed |
| Rented, rent covers PITIA | DSCR refinance | Get payoff statement and rent evidence |
| Balloon very close, seasoning unmet | Hard money bridge | Ask how each lender counts seasoning |
| Rent too thin at high leverage | Lower leverage or sub-1.00 path | Test coverage at several loan sizes |
| Seller has an underlying mortgage | Resolve the lien first | Order a title search before choosing |
Using Both in Sequence
Many investors do not choose one. They bridge with hard money, stabilize the property, then refinance into long-term DSCR financing. Lendmire brokers that path through its hard money exit refinance program. The trade-off is the second closing, so the bridge only makes sense when the property truly cannot qualify yet.
For investors weighing other payoff routes, Lendmire’s piece Paying Off a Hard Money Loan With a DSCR Cash-Out Refinance: Getting the Rehab Money Back covers getting the rehab money back. The complete DSCR loans guide explains how the underwriting works.
Key Terms Defined
Equitable title: the buyer’s ownership interest while the seller still holds the deed.
Balloon: the lump-sum balance due at the end of the land contract term.
Seasoning: the ownership period a lender requires before it allows cash-out.
PITIA: principal, interest, taxes, insurance, and any association dues, the full monthly obligation.
Payoff-only: a refinance that covers the payoff and closing costs without returning cash.
The Balanced Verdict
Choose hard money when the property is not ready, or the clock is short. Choose a DSCR refinance when the property rents and the numbers clear. If the answer sits between the two, price both routes, including the second closing. Tax treatment varies; consult a qualified professional.
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Reach the team at 828-256-2183.
Frequently Asked Questions
Can a hard money loan pay off a land contract?
Yes, if the seller delivers legal title at closing and the lender gets a first lien. The loan is sized on the property and the exit, and it is usually short-term, so a take-out loan typically follows.
Does a DSCR refinance pay off the seller at closing?
Yes. The payoff goes to the seller through the title company, the seller’s interest is released, and the deed is delivered when the new lien is recorded. Entity vesting is subject to lender program eligibility.
Does seasoning apply to a land contract payoff?
Seasoning can apply to a land contract payoff. Seasoning is lender policy, and programs count it from different dates. Some start at the recorded deed, others at actual title transfer. About 6 months is a common expectation for cash-out.
Can I take cash out when I pay off the contract?
On a DSCR loan, cash-out tops out around 75% LTV, and the file is reviewed as a cash-out if any cash returns. A payoff-only file is generally treated differently. Equity available is not a guaranteed figure.
Do agency refinance rules apply to a DSCR payoff?
No. DSCR loans set their own program rules, so agency treatment of land contract payoffs does not carry over.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. CFPB: CFPB Contract for Deed Report
2. UpCounsel: Contract for Deed
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Get a DSCR Refinance Through With a Non-Paying Tenant · How Long Each Step of a DSCR Refinance Takes to Pay Off Hard Money · DSCR Cash-Out Now vs Waiting for Hard Money and Rehab Card Payoff
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.