Investors who bought San Jose rentals a decade or more ago are often sitting on more equity than they paid for the property. A DSCR cash-out can unlock part of it, and the real question is how much cushion you want between the rent and the new payment.
In short: LendingStreet offers DSCR cash-out refinances on San Jose rentals of 1 to 8 units, up to 75% LTV, qualified on the property's rent with no W-2s or tax returns. The standard minimum DSCR is 1.0x and the minimum credit score is 620. On long-held Silicon Valley rentals, the rent usually limits the loan before the 75% LTV ceiling does, and a low Prop 13 tax bill helps the ratio.
Typical borrowers own a single-family rental in Evergreen, Berryessa, Blossom Valley or Cambrian bought in the early 2010s, a condo or townhome in North San Jose, or a duplex near downtown. Property values have risen sharply, rents have grown, and many owners have small loan balances or none at all. Some are former residents who moved out of the area and kept the house as a rental; once it is a non-owner-occupied investment property, a DSCR loan can refinance it.
Common goals are buying another rental, often in a higher-yield market, paying off short-term debt, funding an ADU on the same property, or building reserves. Because the loan qualifies on rent, personal income and tax returns are not part of the file.
Every cash-out has a ceiling of 75% of appraised value and a second ceiling set by the DSCR test: the largest loan whose payment, plus taxes, insurance and any HOA, the rent covers at the required ratio. In San Jose, single-family rents are high in dollars but modest relative to value, so the DSCR ceiling is usually lower.
Many owners choose to borrow below even the DSCR ceiling. A ratio above 1.0x leaves room for a vacancy, an insurance increase or a repair without the property going negative.
Condos and townhomes in North San Jose add HOA dues to the payment, which lowers the loan the rent supports. Duplexes often do better, since two rents spread the cost of a larger balance.
This example is illustrative and not a quote. An investor owns an Evergreen single-family rental that appraises at $1,550,000 and leases for $5,300 a month. Because of Prop 13, taxes are only about $700 a month; insurance is $220. The existing loan balance is $260,000.
The table shows the loan the rent supports at three target ratios. At 1.20x the investor borrows $525,000; at 1.00x, the program minimum, the loan rises to $658,000, about 42% of value, and cash before closing costs is about $398,000. Even the largest option is well under the 75% LTV ceiling. A sub-1.0 DSCR program could go further, with tradeoffs.
| Target DSCR | Loan | LTV | Total monthly payment | Cash before closing costs |
|---|---|---|---|---|
| 1.20x | $525,000 | 34% | $4,413 | $265,000 |
| 1.10x | $585,000 | 38% | $4,812 | $325,000 |
| 1.00x | $658,000 | 42% | $5,298 | $398,000 |
A refinance does not trigger reassessment, which is why long-held San Jose rentals often have very low tax bills relative to value. But transferring title from your own name into an LLC can be treated as a change in ownership unless an exclusion applies, which could reset taxes to current value and erase the ratio advantage shown above.
Talk with a California real estate attorney before you retitle. We can lend to an LLC, but the tax planning is yours.
We qualify on the lease in place. If your property is an apartment in a building of three or more units built before late 1979, San Jose's Apartment Rent Ordinance limits annual increases, and a long-term tenant may pay well below market. Single-family homes, condos and duplexes are generally outside that ordinance but may be covered by California's Tenant Protection Act. Either way, a rent that has lagged the market lowers the loan the property supports.
If you bought or finished a renovation recently, seasoning rules determine whether the loan uses the new appraised value or your cost. Requirements vary by program; our seasoning guide covers the usual time frames. Owners who have held for years generally clear seasoning without issue.
The appraisal itself still matters on a seasoned property. San Jose values vary block by block with school assignments, lot size and updates, so share recent improvements, such as a new roof, windows or a remodeled kitchen, with the appraiser. Documented upgrades can support a higher value and a larger cash-out where the ratio allows.
Cash-out proceeds are business funds, used for investment purposes. Many San Jose owners use them to diversify: a single high-value Silicon Valley rental can fund down payments on several properties in markets where rents are higher relative to price, which can raise total cash flow while keeping the original property.
Others keep the capital close to home by adding an ADU or buying a duplex nearby. Either way, decide how the proceeds will be deployed before you size the loan, so you are not paying interest on idle cash.
Some San Jose owners take cash out, build a permitted ADU and then refinance again once the ADU is leased. The second rent can raise the ratio and the loan the property supports. San Jose's pre-approved ADU plan options can shorten design time. Keep in mind that the county may add the ADU's value to your assessed value as new construction.
Send the address, estimated value, current lease, mortgage statement and latest tax bill through the form below, or call (877) 298-1001. We will show the loan at several target ratios so you can choose your cushion. See our California cash-out page for statewide terms.
Up to 75% of value minus payoffs and costs, limited by the DSCR test. On most single-family rentals, the ratio is the tighter limit.
No. A refinance is not a change in ownership under Prop 13. Retitling into an LLC can be, so check first.
Not necessarily. A ratio above 1.0x leaves room for vacancies and cost increases. Many owners choose a cushion.
Yes, if it meets program requirements. HOA dues count in the payment.
It varies by program. Long-held properties usually meet it.
Yes. Proceeds can fund investment purchases in other states.
No. The loan qualifies on the property's rent.
Yes. LLC borrowers are standard, and you sign for the loan personally.
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