Sacramento investors who bought before the Bay Area migration wave are often sitting on large equity gains and low Prop 13 tax bills. That combination makes a DSCR cash-out worth a look, as long as rents support the bigger loan.
In short: LendingStreet finances DSCR cash-out refinances on Sacramento-area rentals of 1-8 units, up to 75% LTV and qualified on rent with no tax returns. Rent has to cover the new payment at 1.0x on standard programs, and in Sacramento prices often run ahead of rents, so many owners land between 65% and 75% LTV. Prop 13, Mello-Roos assessments in newer suburbs and California tenant protections are the local items to check.
A DSCR cash-out refinance sizes a new loan off today's appraised value, up to 75% LTV, pays off what you owe and releases the rest. Nothing in the file depends on your personal income; the property's lease or market rent carries the loan.
Underwriting compares that rent with the full new payment, including taxes, insurance and any association dues. A ratio of 1.0x or higher fits standard programs, and the maximum LTV can be lower on 5-8 unit buildings and larger balances, so it varies by program. Sacramento owners have one advantage: under Prop 13, a refinance does not reassess the property, so your tax line stays where it is.
In the city, East Sacramento, Land Park and Curtis Park have older bungalows and Tudors with strong tenant demand, while Oak Park, Tahoe Park and North Highlands offer lower prices and more duplexes. Midtown has fourplexes and converted Victorians near the Capitol.
Suburban rentals spread across Elk Grove, Natomas, Rancho Cordova and Citrus Heights, with higher-priced stock in Roseville, Folsom and Rocklin. Davis and West Sacramento across the river serve UC Davis and state workers.
| Area type | Examples | Typical rental | Cash-out watch item |
|---|---|---|---|
| Central city | East Sac, Land Park, Midtown, Curtis Park | Older bungalows, fourplexes | Rent vs. value spread |
| Affordable city areas | Oak Park, Tahoe Park, North Highlands | Duplexes, ranches | Condition and permits |
| Newer suburbs | Natomas, Elk Grove, Folsom, Roseville | Newer single-family | Mello-Roos on the tax bill |
California's Prop 13 sets the assessed value at purchase and limits annual increases to 2%, and a refinance does not change it. An investor who bought a decade ago may pay taxes well below what a new buyer would. That helps the ratio on a cash-out.
Many newer subdivisions in Natomas, Elk Grove, Folsom Ranch and Roseville carry Mello-Roos or community facilities district assessments and other special charges on the tax bill. They count in the payment, so pull the full secured tax bill from the county, not just the base 1% tax. Some of these assessments run for decades and step up each year, so check the schedule as well as this year's amount.
This example is illustrative and not a quote. An investor bought a Curtis Park duplex years ago and it now appraises at $640,000, with $260,000 owed. The units rent for $4,300 combined. Thanks to Prop 13, taxes are about $420 a month; insurance is about $170.
At 75% LTV the new loan is $480,000. After paying off the $260,000 balance, about $220,000 is left before closing costs. Estimated principal and interest on a 30-year schedule is about $3,356, so with taxes of $420 and insurance of $170 the monthly payment is about $3,946 and DSCR is about 1.09x.
At 70% LTV the loan is $448,000, the payment about $3,722 and DSCR about 1.16x, with $188,000 of cash and more cushion.
A new buyer paying today's price would face a much higher tax bill on the same duplex. The long-time owner's low Prop 13 base is what keeps the 75% scenario above 1.0x.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Appraised value | $640,000 | $640,000 |
| Loan amount | $480,000 | $448,000 |
| Existing payoff | $260,000 | $260,000 |
| Cash before closing costs | $220,000 | $188,000 |
| Estimated principal and interest | $3,356 | $3,132 |
| Taxes and insurance | $590 | $590 |
| Total monthly payment | $3,946 | $3,722 |
| DSCR at $4,300 rent | About 1.09x | About 1.16x |
Parts of the Sacramento region sit behind levees, and some areas, including portions of Natomas, are in flood zones that require coverage. In the foothills of Placer and El Dorado counties, wildfire risk has pushed several carriers to limit new policies, and some owners end up on the California FAIR Plan with a supplemental policy.
Get a real quote before you apply. A rental that was cheap to insure five years ago can cost far more today, and that difference lands directly in the ratio.
California's statewide rent cap limits annual increases on many rentals more than 15 years old and requires just cause for terminations after a tenant's first year. The City of Sacramento adds its own tenant protection program, a rental housing inspection program and a business operations tax for rentals.
For a cash-out, underwriting uses rent the property can legally collect. If a unit is below market, the lease controls, not the market survey. Keep city registrations and business tax records current, since a lapse can complicate a refinance. Suburban cities such as Elk Grove, Folsom and Roseville set their own rental rules, so check the city where the property sits.
Having these ready shortens the appraisal and underwriting timeline.
LendingStreet finances business-purpose DSCR loans on non-owner-occupied rentals, and we lend on 1-8 unit properties throughout Sacramento, Placer, El Dorado and Yolo counties. Many owners use the proceeds as the down payment on their next rental, to fund renovations or to build reserves.
Use the form below or call (877) 298-1001 with the property address, rents, payoff and what you plan to do with the cash. We size the loan at more than one LTV so you can see where the ratio lands before an appraisal is ordered.
No. Under Prop 13, a refinance is not a change in ownership, so your assessed value stays the same.
It is a special tax that funds infrastructure in many newer subdivisions. It appears on the tax bill and counts in the payment.
Yes, but the ratio uses the rent the lease allows. With California's rent cap, a below-market unit may limit the loan.
It can be. Some owners need the FAIR Plan plus a supplemental policy. Get a quote early and include it in your numbers.
Waiting periods vary by program. If you bought recently, expect the loan to be sized either on the new appraisal under a short-seasoning program or on your purchase price plus documented improvements.
No. The loan qualifies on the property's rent. You still need a 620 or higher credit score, reserves and entity documents if title is held in an LLC.
No. Most of our Sacramento DSCR borrowers hold title in an LLC, which is standard on these programs.
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