California prices are high relative to rents, so DSCR deals here often live or die on the down payment and the insurance quote. The right lender is the one whose program fits those numbers.
In short: No single DSCR lender is best for every California deal; the right choice depends on your property, your down payment and how the ratio comes out. Because purchase prices are high compared with rents, many California investors put more than 20% down or buy 2-4 unit properties to clear the 1.0x standard minimum. LendingStreet finances investment property in California with DSCR rates from 6.125%, up to 80% LTV on purchases and LLC borrowing allowed. Get your insurance quote early, since wildfire risk can change both the cost and whether coverage is available.
Kiavi, Visio Lending, Angel Oak and Lima One also write DSCR loans, alongside LendingStreet. Each has its own rules on leverage, minimum ratio, condos and 2-4 unit properties.
A good way to compare is to send the same property, rent and expenses to two or three lenders and line up the term sheets. In California, the ratio is usually the tightest constraint, so look at how each program treats a deal that lands near 1.0x.
DSCR compares the property's rent to its full monthly payment: principal, interest, taxes, insurance and any HOA dues. In much of California, prices have climbed faster than rents, so the payment on a typical 80% loan can exceed the rent.
Investors usually solve this one of three ways. They put more money down, they buy a 2-4 unit property where several rents support one price, or they use a program that accepts a ratio below 1.0. Property taxes are generally based on the purchase price when you buy, so use a tax estimate based on your price, not the seller's old bill.
Los Angeles and San Diego carry the highest basis, and most DSCR buyers there either put significant equity down or target small multifamily. The Inland Empire, around Riverside and San Bernardino, offers lower prices and a large stock of single-family rentals.
Sacramento draws investors priced out of the Bay Area, and Fresno and the broader Central Valley have some of the lower entry prices in the state. Rent-to-price is often more workable inland, but insurance and taxes still need to be checked on every deal.
California has a statewide rent cap and just-cause eviction law that applies to some residential properties, with exemptions that depend on the property and owner. Several cities, including Los Angeles, also have their own rent control. Lenders generally underwrite the rent you can actually collect, so confirm a property's status with local counsel before you count on a rent increase.
Wildfire risk affects homeowners insurance across much of the state. Some carriers have limited new policies, and some owners end up with the state's FAIR Plan plus a separate policy for other coverage. Get a binding quote before you finalize numbers, because a higher premium lowers the ratio.
This example is illustrative and not a quote. An investor buys a fourplex for $800,000. Each unit rents for $1,250, so gross rent is $5,000 a month. Taxes based on the purchase price plus insurance come to $983 a month. The sample rate is 7.25% on 30-year amortization.
At 75% LTV the loan is $600,000, principal and interest is about $4,093, the total payment is about $5,076 and DSCR is about 0.99x, just under the 1.0x standard minimum. At 65% LTV the loan is $520,000, principal and interest is about $3,547, the total payment is about $4,530 and DSCR is about 1.10x. The extra $80,000 down moves the deal from a sub-1.0 file to a standard one.
| Item | 75% LTV | 65% LTV |
|---|---|---|
| Loan amount | $600,000 | $520,000 |
| Principal and interest | About $4,093 | About $3,547 |
| Taxes and insurance | $983 | $983 |
| Total payment | About $5,076 | About $4,530 |
| DSCR on $5,000 rent | About 0.99x | About 1.10x |
We offer DSCR rental loans that qualify on the property's rent, with no W-2s or tax returns. Rates start at 6.125% for well-qualified borrowers, with up to 80% LTV on purchases, up to 75% on cash-out, a 620 minimum credit score and 30-year fixed options.
For tight California ratios, we can look at a larger down payment, a sub-1.0 program or a no-ratio option, subject to program rules. Short-term rentals can qualify on projected revenue, with rates from 6.49%. Our financing team reviews the scenario and comes back with 2-3 options.
Send the purchase contract or property address, current leases or a market rent estimate, an insurance quote and your LLC documents. Add bank statements showing your down payment and reserves.
If the property may fall under local rent control or the statewide rent cap, note that up front. For a condo, request the HOA budget and questionnaire early, since review can take time.
Yes. LendingStreet finances investment property in California, from Los Angeles and San Diego to Sacramento and the Central Valley. Loans are business-purpose on non-owner-occupied property, starting at $150,000.
It depends on the deal. Kiavi, Visio Lending, Angel Oak, Lima One and LendingStreet all write DSCR loans. Compare term sheets on the same property, paying close attention to minimum ratio and leverage.
Programs allow up to 80% LTV on purchases, so 20% down is the floor. In high-priced California markets, many investors put 25% to 35% down so the rent covers the payment.
Some programs accept a ratio under 1.0, and no-ratio options exist. They usually come with lower leverage or different pricing than a standard 1.0x loan.
Yes. Insurance is part of the payment in the ratio, so a higher premium lowers DSCR. Coverage also has to be in place to close, so get a quote before you finalize your offer.
It can. Lenders count the rent the property can legally collect. Confirm whether local rent control or the statewide rent cap applies with local counsel before you underwrite.
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