DSCR Loans in California

It depends on the program. Some lenders require a ratio of at least 1.00, meaning rent covers the full payment. Others will go down to 0.75 in exchange for a lower maximum loan-to-value. Loans under roughly $150,000 often require 1.25.

Often yes, but with overlays. Expect a higher minimum credit score, commonly 660 to 680, a reduced maximum loan-to-value, additional reserves, and documentation that you own your own home and have paid on time. Some programs require a year of landlord experience and will not consider first-time investors at all, which is one reason we place these loans with several lenders.

On a purchase, lenders generally use the market rent the appraiser establishes on the comparable rent schedule, Fannie Mae Form 1007 for a single unit or Form 1025 for two to four units. On a refinance, they generally use the lower of your actual lease or that market rent. Several lenders will allow a lease above market, commonly up to 120 percent of the appraiser's figure, if you can document that the tenant has been paying it on time.

On several programs, yes. A common requirement is that at least one borrower has owned or managed rental property for 12 months within the last three years. Other lenders waive it for borrowers who own their primary residence, in exchange for a lower loan-to-value and additional reserves. Requirements vary, so it is worth asking before you assume you are excluded.

On some programs, yes. Where short-term rental income is allowed, expect a higher minimum DSCR, a reduced maximum loan-to-value, a credit score floor around 700, at least a year of documented operating history, an income haircut of roughly 20 to 25 percent, and evidence that both the city and the HOA permit short-term rentals. Other lenders will not consider short-term rental income at all.

Yes, on every DSCR program we place. You will apply and personally guarantee the loan as an individual, and provide formation documents, an operating agreement, and a certificate of good standing. Layered entities, where an LLC is owned by another LLC or a trust, are generally not permitted.

Usually. Prepayment penalties are permitted in California and are common on these programs, with terms running one to five years. Some lenders offer a no-penalty option at a lower maximum loan-to-value. If you expect to sell or refinance within a few years, mention it early, because it changes which lender makes sense.