California rentals carry high prices and tight ratios, so the terms on the long-term loan matter more here than almost anywhere. A DSCR rate-and-term refinance replaces hard money, a bridge loan or a higher-rate loan without adding cash-out to the balance.
In short: Yes, LendingStreet finances DSCR rate-and-term refinances on 1-8 unit investment properties in California, up to 80% LTV on some programs, qualified on the property's rent with no W-2s or tax returns. The new loan pays off your existing hard money, bridge or higher-rate loan plus closing costs, with only a small amount of cash back allowed on most programs. Our investor loans are business-purpose loans on non-owner-occupied property, starting at $150,000 with a 620 minimum credit score. In California, rent caps that limit how fast in-place rents can rise and the cost of fire and hazard insurance are the two items that shape most files.
In a rate-and-term refinance, the new DSCR loan retires your existing debt and nothing more, apart from closing costs and, on most programs, a small amount of cash back. You are changing the price and shape of the debt, not the amount of equity you hold.
Leverage can reach up to 80% LTV on some programs, compared with up to 75% on a cash-out. The loan qualifies on the property's rent, not your W-2s or tax returns. The ratio of rent to the full new payment, including taxes, insurance and HOA dues, needs to be at least 1.0x on standard programs.
California investors often buy older single-family homes, duplexes and small multifamily in Sacramento, the Inland Empire, Fresno and Bakersfield, renovate with short-term money and then refinance. Others add an ADU to a single-family lot and refinance once it is permitted and leased. Rate-and-term is common here because ratios are tight, and keeping the balance close to the payoff often helps the property clear 1.0x.
Rate-and-term is also the cleaner choice when the property's rent only modestly exceeds the payment. Adding cash-out raises the balance and lowers the ratio, while a rate-and-term keeps the debt where it is and focuses on better terms.
Short-term loans are interest-only and come due quickly, which works during a rehab but not for a long-term hold. A rate-and-term DSCR refinance replaces that debt once the property is stabilized and leased.
Timing matters. Lenders consider how long you have owned the property when deciding whether to use the new appraised value or your cost basis, and that rule varies by program. Order the appraisal early and keep invoices and receipts for the work you did.
California has no state mortgage recording tax, and documentary transfer taxes are charged on deeds, so a standard refinance usually avoids them. Some cities, including several large ones, add their own transfer taxes on sales, but those also generally apply to deed transfers rather than refinances.
California refinances close through escrow and title companies with deeds of trust. Refinancing does not trigger a Prop 13 reassessment, but deeding the property into an LLC can raise reassessment questions, so speak with your title officer or tax advisor before changing vesting.
Statewide rent cap rules cover many older rentals, and cities such as Los Angeles, San Francisco and Oakland have their own rent control. These limit how quickly in-place rent can rise, so the DSCR is usually set on the current lease rather than a hoped-for increase.
Insurance is a growing issue. Several carriers have pulled back in wildfire-prone areas, and some owners have moved to the state FAIR Plan with a supplemental policy, which can cost more. Earthquake coverage is optional but often priced. Property taxes generally run near 1% of assessed value plus local assessments.
This example is illustrative and not a quote. An investor owns a single-family rental with a permitted ADU in Sacramento appraised at $540,000. The existing bridge loan used to buy the home and build the ADU has a payoff of $395,000, costs about $3,460 a month interest-only and matures in 3 months. Rent is $3,400 a month, and taxes, insurance and any HOA dues run $640 a month.
Rolling about $10,000 of closing costs into the loan gives a new balance of $405,000, or about 75.0% LTV, inside the 80% ceiling some programs allow. On a 30-year term, principal and interest is about $2,694, so the full payment is about $3,334 and the DSCR is about 1.02x. The short-term maturity is gone and the payment is fixed. That ratio is close to the 1.0x minimum, so a higher insurance quote or tax bill could push it under; check both before you apply.
| Item | Amount |
|---|---|
| Appraised value | $540,000 |
| Existing loan payoff | $395,000 |
| Closing costs rolled in | $10,000 |
| New loan amount | $405,000 |
| Loan-to-value | 75.0% |
| Principal and interest (30 years) | About $2,694 |
| Taxes, insurance and HOA | $640 |
| Total monthly payment | About $3,334 |
| Monthly rent | $3,400 |
| DSCR | About 1.02x |
The two refinances use the same DSCR underwriting, but the limits differ. Here is how they line up on a typical 1-8 unit rental.
If you are unsure which fits, ask for a quote on each. The difference in loan amount, payment and DSCR on the same California property usually makes the choice clear, and the form below can request either.
| Feature | Rate-and-term | Cash-out |
|---|---|---|
| Purpose | Pay off existing loan and costs | Pay off loan and take equity |
| Maximum LTV | Up to 80% on some programs | Up to 75% |
| Cash at closing | Small allowance, varies by program | Up to the LTV limit |
| Minimum DSCR (standard) | 1.0x | 1.0x |
| Minimum credit score | 620 | 620 |
| Income documents | Rent only, no W-2s or tax returns | Rent only, no W-2s or tax returns |
Sacramento, Stockton and the Central Valley, including Fresno and Bakersfield, offer lower prices and more workable ratios than the coast. The Inland Empire, including Riverside and San Bernardino, draws investors for single-family rentals. Los Angeles, the Bay Area and San Diego have high values and often need larger down payments or sub-1.0 DSCR programs. Many coastal cities limit short-term rentals, so confirm local rules first.
Most delays come from missing paperwork. Pull these together before you request a quote. Call (877) 298-1001 or use the form below to get a quote.
Yes. LendingStreet refinances non-owner-occupied 1-8 unit rentals in California with DSCR loans starting at $150,000, up to 80% LTV on some programs.
It can. Under statewide and local rent caps, in-place rent may rise slowly, so the ratio is usually set on the current lease. Long-term tenants under market rent can lower the DSCR.
Most programs allow a small amount of cash back at closing, but the limit varies. Taking more turns the loan into a cash-out refinance, which has a 75% LTV ceiling.
A refinance generally does not trigger reassessment. Changing ownership, including some transfers into an LLC, can raise reassessment questions, so check with your title officer or tax advisor.
Seasoning varies by program. Recently purchased properties may be sized on purchase price plus documented improvements rather than the new appraised value.
Yes, if the ADU is permitted and leased. Unpermitted units are often excluded from rent and value, which can change the ratio.
Standard programs need at least 1.0x. Sub-1.0 DSCR programs exist, or you can lower the balance by bringing cash to closing.
No. The loan qualifies on the property's rent, not your personal income. You still need a 620 or higher credit score, reserves and entity documents if the property is in an LLC.
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