Sacramento costs less than the Bay Area but more than most of the country, so rent covering a full payment takes careful buying. Duplexes, older neighborhoods and a realistic tax figure are where most Sacramento DSCR deals come together.
In short: LendingStreet offers DSCR purchase and refinance loans for Sacramento-area rentals from 1 to 8 units, qualified on rent instead of personal income. Expect up to 80% LTV on a purchase, up to 75% LTV on a cash-out, a 1.0x standard minimum DSCR and a 620 minimum credit score, with loans from $150,000 and no stated maximum. Prop 13 reassessment at purchase, Mello-Roos in newer suburbs, the city's rental inspection program and California's rent cap rules are the Sacramento items to plan for.
Midtown, East Sacramento and Land Park are expensive, with older homes and some small apartment buildings. Oak Park, Del Paso Heights, North Sacramento and south Sacramento have lower prices and more duplexes. Natomas has newer homes, many in community facilities districts.
In the county, Arden-Arcade, Carmichael, Citrus Heights, North Highlands, Rancho Cordova and Elk Grove are common rental areas. Roseville and Rocklin in Placer County and West Sacramento and Davis in Yolo County are separate jurisdictions with their own taxes and rules.
| Area | Typical rental stock | What to check |
|---|---|---|
| Oak Park and south Sacramento | Bungalows, duplexes, small buildings | Rental inspection program, condition |
| Natomas | Newer homes | Mello-Roos, levee flood zone |
| Arden-Arcade, Citrus Heights, Rancho Cordova | 1950s-80s ranch homes, duplexes | County rules, rent comps |
| Roseville and Elk Grove | Newer subdivisions | Mello-Roos, HOA rules, higher prices |
Single-family homes in Sacramento often fall short of 1.0x at 80% LTV, because prices are high relative to rent. Investors close the gap with larger down payments, by buying duplexes and fourplexes that qualify on combined rent, or with sub-1.0 DSCR programs.
California allows accessory dwelling units broadly, and many Sacramento lots have room for one. A legal, permitted ADU with its own lease can add rent the appraiser counts. Older homes in Oak Park and Land Park can need foundation, electrical and sewer lateral work, so inspect before you commit.
Under Prop 13, property is reassessed to the purchase price at sale, and the base tax is about 1% of assessed value plus voter-approved bonds and assessments. A long-held home can carry a far lower bill than you will pay, so budget on your purchase price, not the seller's bill.
Many newer neighborhoods in Natomas, Elk Grove and Roseville sit in community facilities districts, known as Mello-Roos, whose special taxes appear on the property tax bill and count in the DSCR payment. Sacramento County charges a documentary transfer tax, and the City of Sacramento adds its own.
Natomas and other low areas sit behind levees, and some properties require flood insurance. In the foothills of Placer and El Dorado counties, wildfire exposure has made coverage harder to find, with some owners pushed to the California FAIR Plan. Get quotes early.
California's statewide rent cap and just-cause rules under AB 1482 apply to many rental units, with exemptions for some single-family homes owned by individuals that give proper notice. The City of Sacramento has its own Tenant Protection Program and requires rental properties to register under its Rental Housing Inspection Program.
Short-term rentals in the City of Sacramento require a permit and transient occupancy tax, and county areas and other cities have their own rules. Most Sacramento DSCR loans are written on 12-month leases.
This example is illustrative and not a quote. An investor buys a duplex in south Sacramento with both units leased at current rents.
The purchase price is $560,000 and the rent is $3,600 a month. At 80% LTV the loan is $448,000, so the down payment is $112,000 before closing costs. Estimated principal and interest on a 30-year loan comes to about $3,056, and taxes and insurance add $685, for a total payment of about $3,741. Rent divided by that payment gives a DSCR of about 0.96x, below the 1.0x standard minimum.
At 70% LTV the loan drops to $392,000, the payment falls to about $3,359 and the DSCR rises to about 1.07x. The investor brings $56,000 more to closing, which is the usual trade in a market where prices run high relative to rent.
| Item | 80% LTV purchase | 70% LTV purchase |
|---|---|---|
| Purchase price | $560,000 | $560,000 |
| Loan amount | $448,000 | $392,000 |
| Estimated principal and interest | $3,056 | $2,674 |
| Property taxes | $515 | $515 |
| Insurance | $170 | $170 |
| Total monthly payment | $3,741 | $3,359 |
| Monthly rent | $3,600 | $3,600 |
| DSCR | 0.96x | 1.07x |
Underwriting starts with the property, not your pay stubs. We divide the rent by the total monthly payment (principal, interest, taxes, insurance and HOA) and look for at least 1.0x on standard programs. Sub-1.0 programs are available when a strong property misses by a little.
Two to four unit buildings use the rent from all units together, and 5 to 8 unit buildings are financed as residential DSCR loans with leverage that varies by program. Anything with 9 or more units moves to commercial multifamily. For markets outside the metro, see our California DSCR page.
A complete file gets a faster answer. Our investor loans are business-purpose loans on non-owner-occupied property; tell us the address, the rent and your target loan amount and we will show where the ratio lands. Request a quote with the form below or call (877) 298-1001.
Prop 13 reassesses the property to your purchase price at sale. Budget on about 1% of the price plus local bonds and any Mello-Roos tax.
It applies to many units, with exemptions for some single-family homes owned by individuals. Underwrite on current rents, and confirm which rules apply.
Often, yes, because the combined rent of two units supports the payment better than one rent at a similar price.
Rentals in the City of Sacramento generally must be registered under the Rental Housing Inspection Program. County areas and other cities have their own rules.
Purchases go up to 80% LTV, so at least 20% down plus closing costs and reserves. Larger balances and 5-8 unit buildings can require more, and that varies by program.
No. The loan qualifies on the property's rent. You still need a 620 or higher credit score, reserves and entity documents if you close in an LLC.
Yes, up to 75% LTV, as long as the rent covers the new payment at the program minimum. Seasoning requirements vary by program.
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