In Los Angeles, the numbers on a rental refinance start large: high values, Prop 13 tax bases, rent control and a hardening insurance market. A DSCR rate-and-term refinance replaces short-term or older debt on a leased LA rental with long-term financing sized on the rent.
In short: LendingStreet's DSCR rate-and-term refinance replaces short-term or older debt on a Los Angeles rental with a long-term loan qualified on rent, not tax returns. Loans start at $150,000 with up to 80% LTV on some programs, a 1.0x standard minimum DSCR, 620 minimum credit, and LLC borrowers are standard. LA investors buy duplexes and fourplexes, add ADUs, or complete renovations with short-term money, then refinance into long-term debt.
LA investors buy duplexes and fourplexes, add ADUs, or complete renovations with short-term money, then refinance into long-term debt. Because values are high and rents are capped on many older buildings, the ratio is often tight, and a rate-and-term refinance at a moderate loan-to-value is the common path.
With rate-and-term, the new loan covers the payoff and closing costs and nothing more. The payoff is a predictable long-term payment instead of a looming balloon or an extension fee.
Investors buy in Highland Park, Eagle Rock, Echo Park, Mid-City, Leimert Park, Boyle Heights, South LA, and the San Fernando Valley, including North Hollywood and Van Nuys, plus Long Beach, Inglewood, Pasadena and Glendale.
The stock includes 1920s Spanish and Craftsman bungalows, courtyard buildings, and post-war duplexes and fourplexes. Many lots now include ADUs. Seismic retrofits and older systems are common inspection items.
LA appraisals for duplexes and fourplexes use both comparable sales and an income approach. Units under the Rent Stabilization Ordinance may rent below market, so the appraiser will use actual leases for the ratio. ADUs can add income if permitted. In-place rents matter more than market rents for older rent-controlled buildings. The appraiser will also check seismic retrofit status on soft-story buildings, which the city requires on many older soft-story wood-frame buildings.
If the goal is ending a short-term loan, rate-and-term is usually the cleaner path. If you want equity out for another purchase, a cash-out refinance is the tool, at a lower max LTV.
Before choosing, compare the payoff with what the appraisal is likely to show. If the loan you need is under 75% of value, either option works; if it is closer to 80%, rate-and-term may be the only fit.
| Item | Rate-and-term | Cash-out |
|---|---|---|
| Purpose | Pay off existing debt and closing costs | Pull equity out as cash |
| Max LTV | Up to 80% on some programs | Up to 75% |
| Cash to you | Little or none | Equity above the payoff |
| Seasoning | Varies by program | Varies by program; often longer |
| Best fit | Ending hard money or bridge debt | Funding the next purchase |
This example is illustrative and not a quote. An investor owns a South LA fourplex, appraised at $1,350,000, with a $930,000 balance on a short-term loan. Rent is $9,200 a month across four units. The new loan pays off the existing balance and rolls in about $14,000 of closing costs, for a loan of $944,000, or about 70% of value.
On 30-year amortization, estimated principal and interest is about $6,440 a month. Adding taxes of about $1,400 and insurance of about $360 brings the total to about $8,200, so the DSCR is about 1.12x against the 1.0x standard minimum. This balance sits below our jumbo range, which starts around $1.5M, but larger LA buildings often cross it, and bigger balances can mean more review and a lower max LTV, which varies by program.
| Item | Amount |
|---|---|
| Appraised value | $1,350,000 |
| Existing loan payoff | $930,000 |
| Closing costs rolled in | $14,000 |
| New loan amount | $944,000 (about 70% LTV) |
| Estimated principal and interest | $6,440 |
| Taxes, insurance and HOA | $1,760 |
| Total monthly payment | $8,200 |
| Monthly rent | $9,200 |
| DSCR | About 1.12x |
Prop 13 sets assessed value at purchase and limits annual increases. A refinance does not reassess the property. Local voter-approved assessments add to the bill.
California's documentary transfer tax and LA's Measure ULA apply to sales, not refinances. Refinance costs include title, escrow, appraisal and lender fees.
Wildfire has reshaped LA insurance, especially after the January 2025 fires. Many owners have moved to the California FAIR Plan with a separate policy for other coverages. Earthquake coverage is separate.
Most multi-unit buildings built before October 1978 fall under the City of LA's Rent Stabilization Ordinance, and the state's rent cap covers many others. LA's home-sharing ordinance limits short-term rentals to a host's primary residence, so investors qualify on long-term leases. Under the RSO, rent increases on covered units are limited each year, and tenant buyouts and evictions follow strict rules. Your DSCR will be based on actual leases, so a building with long-term tenants paying below market may need a lower loan amount. Units built after 1978, including many ADUs, may fall under the state cap rather than the RSO.
Our investor loans are business-purpose loans on non-owner-occupied property. Most borrowers close in an LLC and sign for the loan personally.
The appraisal includes a rent schedule, which sets market rent. The ratio uses the lower of the lease and market rent on many programs, so a lease well above market may not count in full.
Use the form below to get a quote, or call (877) 298-1001. Share the payoff, the leases and your tax and insurance numbers, and we will run the ratio and tell you what the appraisal needs to show. Our California rate-and-term page covers the statewide rules.
We look at the whole picture, including whether a sub-1.0 DSCR program, a lower loan amount or a blanket loan across several rentals would fit better than a single refinance.
No. Refinancing does not trigger reassessment.
LA's home-sharing rules limit short-term rentals to the host's primary residence. Investors qualify on long-term leases.
Yes. The ratio uses actual leases, and RSO units may be below market.
Yes. A legal, permitted ADU adds rent and can raise the DSCR. Unpermitted units usually do not count.
The DSCR basics are the same, but max LTV can be lower on 5-8 units and larger balances; it varies by program.
No. DSCR loans qualify on the property's rent. You do not need W-2s or tax returns.
Some programs allow sub-1.0 DSCR loans. Lower leverage or a lower payment can also help.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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