In California, where a short-term rental is allowed matters more than almost anything else. Los Angeles and San Francisco limit them to a host's primary residence, which rules out investor-owned units, while mountain and desert towns permit them with caps.
In short: LendingStreet makes DSCR loans on California short-term rentals, and some programs size the loan on a third-party projection of short-term rental revenue rather than a 12-month lease. Qualification runs on the property, not your personal income: 620 minimum credit, loans from $150,000 with no stated maximum and LLC ownership allowed. Investors here usually focus on mountain, desert and some coastal towns, because the big coastal cities tie short-term rentals to a primary residence.
Big Bear Lake and Lake Arrowhead in the San Bernardino Mountains draw Southern California weekend traffic year round, with snow in winter and the lake in summer. Joshua Tree, Yucca Valley and Twentynine Palms serve national park visitors, and Palm Springs and the Coachella Valley fill up for winter sun, festivals and golf.
Mammoth Lakes is a ski and summer mountain market with STRs allowed in certain zones. Lake Tahoe's California side varies sharply: South Lake Tahoe limits vacation rentals outside its tourist core, while parts of El Dorado and Placer counties issue permits with caps. Inland and wine country towns each have their own rules.
| Market | Who books | What to check |
|---|---|---|
| Big Bear Lake | SoCal weekenders, skiers | City license, caps, occupancy |
| Joshua Tree and Yucca Valley | National park visitors | County or town permit, septic |
| Palm Springs | Winter visitors, festivals | Permit cap, neighborhood limits |
| Mammoth Lakes | Skiers, summer hikers | Zoning, HOA, snow load |
Los Angeles requires short-term rental hosts to register and use their primary residence, and San Francisco has a similar primary residence rule. San Diego licenses whole-home rentals with a cap. In practice, a non-owner-occupied investor property in those cities generally cannot operate as a nightly rental.
Mountain and desert markets allow investor STRs but regulate them closely through permits, caps, occupancy limits and noise and parking rules, and some have paused new permits at times. Palm Springs limits permits by neighborhood. Confirm availability with the city or county before you make an offer.
Instead of asking for your tax returns, the lender divides the property's income by its full monthly payment, including taxes, insurance and HOA dues. For a vacation rental with no history, some programs accept a third-party revenue projection built from comparable listings. If the property already rents nightly, its booking history can carry more weight.
Most programs look for a ratio of at least 1.0x, and sub-1.0 options exist. Purchase leverage goes up to 80% LTV and cash-out up to 75% LTV, with lower limits on some short-term rental programs and large loans. Loans start at $150,000, the minimum credit score is 620 and 30-year terms are available. Anything from a single condo to an eight-unit building fits the residential program; larger buildings go through commercial lending.
California cities and counties each charge their own transient occupancy tax on stays of 30 days or less, and some add tourism assessments. Platforms collect TOT in many jurisdictions but not all, and most cities require the operator to register regardless.
Under Proposition 13, property is reassessed at the purchase price when it sells, so the seller's tax bill is not a guide. Budget roughly 1% of the purchase price plus local voter-approved levies and assessments, which can be meaningful in newer areas.
Insurance is the hardest line in many California mountain and desert markets. Some carriers have pulled back from wildfire-exposed areas, and buyers sometimes end up with a California FAIR Plan policy plus a separate policy for liability and other coverage. Get a quote that covers short-term rental use early in escrow.
This example is illustrative and not a quote. An investor buys a three-bedroom cabin in Big Bear Lake for $640,000. A third-party projection for comparable licensed cabins shows $61,000 a year in gross revenue. At 75% LTV the loan is $480,000, and estimated principal and interest on a 30-year term is about $3,356 a month. Add $690 in taxes, $330 in insurance, and the payment is about $4,376. $5,083 of average monthly revenue divided by that payment gives a DSCR of about 1.16x.
Putting 30% down changes the picture: a $448,000 loan, a payment of about $4,152 and a DSCR of about 1.22x, with $32,000 more due at closing. The tax line reflects reassessment at the purchase price. An insurance quote that came in several hundred dollars higher, which is possible in wildfire-exposed areas, would pull the ratio close to 1.0x.
| Item | Amount |
|---|---|
| Purchase price | $640,000 |
| Loan amount at 75% LTV | $480,000 |
| Down payment | $160,000 |
| Projected annual revenue | $61,000 |
| Average monthly revenue | $5,083 |
| Estimated principal and interest (30-year) | $3,356 |
| Property taxes | $690 |
| Insurance | $330 |
| HOA dues | None |
| Total monthly payment | $4,376 |
| DSCR | About 1.16x |
Mountain markets earn in two seasons, snow and summer, with slower spring and fall. Desert markets peak from roughly October through April and slow in summer heat. Coastal towns that allow STRs peak in summer. A projection built from licensed comparables in the same town, not a regional average, gives the most reliable figure.
Most delays come from missing items. Pull these together first:
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, projected revenue and target leverage. The financing team checks the ratio at a few loan amounts, flags local permit or HOA issues it sees, and comes back with options, including a long-term-rent fallback if the nightly numbers are thin.
We lend in San Bernardino, Riverside, Mono, El Dorado and Placer counties and other California areas where the rules allow nightly rentals. Call (877) 298-1001 or use the form below to get a quote.
Generally no. Both cities limit short-term rentals to the host's primary residence, which non-owner-occupied investment property does not meet.
Big Bear Lake, Joshua Tree and Yucca Valley, Palm Springs, Mammoth Lakes and parts of the Tahoe area allow them with permits, caps and other rules that change over time.
Under Proposition 13, the property is reassessed at the purchase price. Budget roughly 1% of that price plus local levies.
Often, yes, when paired with coverage for liability and other gaps. The total premium counts in the payment, so get quotes early.
You can put more down, look at a sub-1.0 DSCR program or qualify on long-term market rent instead. Our guide to low STR projections, linked below, walks through each option.
Yes. LLC borrowers are standard on DSCR loans, and you sign for the loan personally as the owner of the entity.
No. Our investor loans are business-purpose loans on non-owner-occupied property, not second homes or residences.
Yes. The appraiser estimates market rent, and on short-term rental programs the revenue figure may come from a third-party projection or booking history. Both feed into the ratio.
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