In Los Angeles, a seven-figure price is often where a duplex starts or a house with an ADU. A large-balance DSCR loan qualifies that property on its rent, not your tax returns.
In short: Yes, you can finance a $1M+ Los Angeles rental with a DSCR loan. LendingStreet's DSCR programs start at $150,000 with no stated maximum, and larger balances are reviewed case by case, with rates from 6.125% for well-qualified borrowers. Purchases go up to 80% LTV, but on bigger loans the maximum is often lower and reserve requirements are higher. In LA, the deals that work usually have more than one rent stream, such as a duplex, a triplex or a house with a permitted ADU, because one rent rarely covers a seven-figure payment.
A DSCR loan divides the property's rent by the full monthly payment: principal, interest, taxes, insurance and any HOA. At Los Angeles prices, a single-family house leased to one tenant often comes in under the 1.0x standard minimum unless the down payment is large.
That is why large-balance LA files tend to be duplexes, triplexes, fourplexes and houses with a permitted accessory dwelling unit. Two or three rents against one mortgage is often what moves the ratio over the line.
California's ADU laws have made it easier to add units on many single-family lots, and LA has seen a lot of them built. For underwriting, the question is not whether an ADU exists but whether it is permitted and whether its rent can be counted.
Fourplexes deserve a mention too. A four-unit building is still a 1-4 unit residential property for DSCR purposes, so it qualifies on rent like a duplex, while five units and up move to our multifamily programs underwritten on net operating income. If you are choosing between a large fourplex and a small five-unit building, ask how each would be underwritten before you decide.
Investor demand for higher-priced rentals shows up across the region, and the housing stock changes the file from one area to the next. These are general patterns, not price claims; confirm current values with local comps.
Los Angeles has some of the most detailed rental regulation in the country, and it affects how a lender reads your rent. The City of LA's Rent Stabilization Ordinance generally covers older multi-unit buildings, and California's statewide Tenant Protection Act adds rent increase caps and just-cause eviction rules to many other rentals. Several cities in the county, including Santa Monica and Pasadena, have their own programs.
If the property is occupied, the current leases may be below market and you may not be able to raise them quickly. Some programs size the loan on existing rents in that case, so a building that pencils at market rent can come in short at actual rent. Confirm coverage and exemptions with a local attorney before you count on rent increases.
Short-term rentals in the City of LA are generally limited to a host's primary residence through the Home-Sharing program. For an investor-owned property, plan on long-term or 30-day-plus rents unless you have confirmed otherwise.
Under Proposition 13, California reassesses property at the purchase price when it sells. The seller's tax bill is not your tax bill, so build the payment from your price, plus any local special assessments that show on the tax roll.
Insurance is the other moving number. Several major carriers have pulled back from writing new homeowners and landlord policies in parts of California, especially in wildfire-exposed hillside and canyon areas, and some owners end up on the California FAIR Plan with a separate policy for the rest of the coverage. Get a real quote early. A large premium comes straight out of the ratio, and lenders want proof of coverage before closing.
The program structure is the same as on a smaller loan. What changes is how much the lender wants to see from you and the property.
Expect more conversation about leverage and reserves as the balance grows. These differences vary by program, so treat the table as a guide to what to ask, not a rate sheet.
| Item | Standard DSCR loan | $1M+ LA rental |
|---|---|---|
| Qualifies on | Property rent | Property rent, often unit by unit |
| Purchase leverage | Up to 80% LTV | Often lower on larger balances; varies by program |
| Cash-out leverage | Up to 75% LTV | Often lower on larger balances |
| Reserves | Program standard | Often higher |
| Appraisal | One appraisal | Some programs require a second appraisal or deeper review |
| ADU rent | Not applicable | Counted only if permitted and supported by the appraisal |
| Pricing | Rates from 6.125% | Priced case by case |
This example is illustrative and not a quote. An investor buys a duplex with a permitted ADU in the San Fernando Valley for $1,600,000. Combined market rent for the two main units and the ADU is $10,400 a month. Taxes are budgeted at $1,950 a month and insurance at $325.
At 70% LTV the loan is $1,120,000 and the down payment is $480,000. At a sample rate of 7.25% on a 30-year fixed, principal and interest is about $7,640. Adding $2,275 for taxes and insurance, the total payment is about $9,915, and DSCR is $10,400 divided by $9,915, or about 1.05x.
Now remove the ADU's $2,600 of rent, as would happen if it were unpermitted and the appraiser could not count it. Rent drops to $7,800 and DSCR falls to about 0.79x. The same property goes from approvable to not approvable at that leverage.
| Item | ADU rent counted | ADU rent not counted |
|---|---|---|
| Loan amount (70% LTV) | $1,120,000 | $1,120,000 |
| Principal and interest | $7,640 | $7,640 |
| Taxes and insurance | $2,275 | $2,275 |
| Total monthly payment | $9,915 | $9,915 |
| Monthly rent | $10,400 | $7,800 |
| DSCR | About 1.05x | About 0.79x |
Older LA properties often have a converted garage, a back house or a room with a separate entrance that was never permitted. Appraisers generally do not give full value or rent credit to unpermitted space, and some programs will not lend on the property at all until it is legalized.
Ask the seller for permits and certificates of occupancy, and compare the county assessor's unit count to what you see. If the numbers do not match, sort it out before you rely on that rent. A legalization plan with permits already filed is easier to discuss than a unit no one has disclosed, and it gives the appraiser something concrete to review. Our financing team can review the file early and tell you how the space is likely to be treated.
At Los Angeles prices, a $500K to $1M loan often means a condo, a townhome or a home outside the Westside. Examples include condos in Koreatown, Downtown, Mid-City and the San Fernando Valley, single-family rentals in Lancaster, Palmdale and parts of Long Beach and the South Bay, and smaller duplexes in the eastern and southern parts of the county.
Leverage on these balances is often closer to the program maximums of 80% LTV on purchases and 75% on cash-out, and reserves are often lighter than on $1M+ loans, though both vary by program. The ratio still has to clear the 1.0x standard minimum, and HOA dues on a condo count in the payment.
Rent control, permits for any ADU or converted garage, and insurance still matter at this size. A unit under the city's rent stabilization ordinance usually qualifies on the rent the tenant pays now, not on market rent.
A complete package moves faster and gets better answers on larger loans. Most of this you will already have from your purchase process.
LendingStreet is an investment property financing company. We finance business-purpose loans on non-owner-occupied rentals, with no W-2s or tax returns, a 620 minimum credit score, LLC borrowers allowed and 30-year fixed options. Higher scores get better pricing.
Send the address, price, rents and your target leverage. The financing team reviews the scenario, checks how the ratio holds up at different loan amounts and comes back with 2-3 options. If the ratio is short, we can also look at programs that go below 1.0x.
Our DSCR programs have no stated maximum. Loans start at $150,000, and larger balances are reviewed case by case based on the property, the rent and your reserves.
Often yes, if the ADU is permitted and the appraiser can support its rent. Unpermitted units usually get little or no rent credit, which can sink the ratio on a large loan.
Purchases go up to 80% LTV, but on larger balances the maximum is often lower. In practice the rent decides it: many LA deals need more equity to reach a 1.0x ratio. Run the numbers in our DSCR calculator first.
It can. If units are occupied at below-market rents and local rules limit increases, some programs size the loan on existing rents. Confirm whether the property is covered with a local attorney.
The City of LA generally limits short-term rentals to a host's primary residence, so most investor properties there are financed on long-term rent. Rules differ in other cities, so confirm locally.
Some programs require a second appraisal or a more detailed review on large balances. Your term sheet will say what applies to your file.
It depends on the appraisal, insurance and title. Large balances can take longer if a second appraisal or deeper review is required, so send a complete file early and build that time into your contract.
Yes. Cash-out goes up to 75% LTV, often lower on larger balances, and the property must still clear the program's minimum ratio at the new, larger payment.
No. LendingStreet finances non-owner-occupied investment property only. If you will live in one unit of a duplex, you would need a consumer mortgage lender.
Yes. DSCR loans start at $150,000 with no stated maximum, and $500K to $1M loans are common for condos in Koreatown, Downtown and the San Fernando Valley and for single-family rentals in Long Beach and the Antelope Valley.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.