Silicon Valley has steady demand for furnished housing: contract engineers, visiting executives, traveling nurses and families between homes. But San Jose's short-term rental rules are built around hosts renting part or all of their own home, which leaves investors with two practical paths: furnished stays of 30 days or more in the South Bay, or true vacation rentals a few hours away.
In short: LendingStreet offers short-term rental DSCR loans to San Jose investors for vacation homes in markets that permit investor-owned STRs, such as Sierra mountain towns, the Tahoe area and parts of the Monterey Bay region. Inside San Jose, short-term rentals are tied to the host's primary residence, and our investor loans are business-purpose loans on non-owner-occupied property, so in-city nightly rentals are not a fit. For South Bay rentals we finance long-term and furnished 30-day-plus rentals with DSCR loans sized on lease income, from $150,000 with LLC borrowers standard.
San Jose requires short-term rental hosts to register, collect transient occupancy tax and rent a home that is their primary residence, with limits on nights when the host is away. An LLC that owns a house in Willow Glen or a condo near Santana Row does not meet that test.
Nearby cities such as Santa Clara, Sunnyvale, Mountain View and Cupertino have their own ordinances, and most are also built around a resident host or restrict stays under 30 days. If someone markets a South Bay property as a turnkey investor Airbnb, ask to see the permit and read the city's code yourself.
Because we never lend on a home the borrower lives in, a property that can only operate as an STR with a resident host cannot be underwritten on short-term revenue.
The South Bay alternative most investors use is the furnished mid-term rental. Stays of a month or longer serve hospital staff near Regional Medical Center, Good Samaritan and O'Connor, consultants on tech campuses in North San Jose and Santa Clara, and families waiting on a home purchase or insurance repair.
For financing, a mid-term rental is underwritten as a long-term rental: the DSCR uses market rent for an unfurnished lease or an actual lease, not nightly rates. That keeps the loan conservative, and any premium you earn from furnishing is upside. Stays of 30 days or more can create tenant rights in California, so use proper leases and get local advice.
| Rental type | Allowed for investors in San Jose? | How the loan is sized |
|---|---|---|
| Nightly STR (under 30 days) | Generally no; tied to host's primary residence | Not available in the city |
| Furnished mid-term (30+ days) | Generally yes, as a tenancy | Market or lease rent, standard DSCR |
| Long-term lease | Yes | Lease rent, standard DSCR |
| Vacation STR outside the metro | Depends on the town or county | Projected or actual STR revenue on some programs |
Most San Jose STR investors look east and south. Sierra foothill and mountain towns along Highway 4, Highway 108 and Highway 120, the Yosemite gateway communities and the Tahoe-Truckee area are common, as are some Monterey Bay and Santa Cruz County locations where permits are available.
The Monterey Peninsula is among the most restrictive areas in the state; several cities there ban or cap non-resident vacation rentals. Santa Cruz County limits permits in some coastal neighborhoods. Many Sierra counties allow STRs with a permit, inspections and occupancy limits tied to septic capacity and parking. Always verify with the county or town before you go under contract.
On some programs, an STR can qualify on a third-party revenue projection instead of a lease. Underwriters compare the projection with similar nearby listings, look at the property's size and amenities, and may reduce it for seasonality and operating costs. A refinance with 12 months or more of booking history usually gets more weight than a projection.
Sierra cabins earn most of their money on summer weekends, holidays and, at higher elevations, ski season. Expect slow months in spring and late fall. The annual total is what has to carry the loan.
This example is illustrative and not a quote. A San Jose investor buys a three-bedroom cabin in a Sierra community where the county issues vacation rental permits. Taxes are estimated at about 1.1% of the purchase price after reassessment, and insurance is higher than in the South Bay because of wildfire risk.
At 70% of the price, the loan is $448,000. Estimated principal and interest is about $3,056 a month. With taxes and insurance, the monthly total is about $4,093. Projected revenue of $62,000 a year averages $5,167 a month, for a DSCR of about 1.26x.
| Item | Amount |
|---|---|
| Purchase price | $640,000 |
| Loan amount (70%) | $448,000 |
| Projected annual revenue | $62,000 |
| Average monthly revenue | $5,167 |
| Estimated principal and interest | $3,056 |
| Property taxes (monthly) | $587 |
| Insurance (monthly) | $450 |
| Total monthly payment | $4,093 |
| DSCR | 1.26x |
Rural cabins bring questions South Bay homes never raise. Many are on wells and septic, and the septic permit can limit how many guests the county allows. Road access, snow load, defensible space and fire department access can affect both insurance and permits.
STR DSCR loans start at $150,000 with no stated maximum, with purchase up to 80% LTV and cash-out up to 75% LTV on some programs. Vacation-area properties and STR programs can carry lower maximum leverage, so it varies by program. The minimum credit score is 620, 30-year terms are available, and you qualify on the property's income, not your W-2.
LLC borrowers are standard, and you sign for the loan personally. Many Silicon Valley buyers hold each vacation home in its own LLC.
Send the address, the permit status or the county's permit rules, a revenue projection or booking history, and an insurance quote. If the property is in the South Bay, tell us whether you plan a long-term or furnished monthly rental and we will size it as a DSCR loan instead. Call (877) 298-1001 or use the form below to get a quote.
Not as an investor STR. San Jose ties short-term rentals to the host's primary residence, and we do not lend on homes borrowers live in.
Stays of 30 days or more are generally treated as tenancies rather than short-term rentals. Use proper leases and check tenant rules. We size those loans on market or lease rent.
Each city has its own rules, and most restrict stays under 30 days or require a resident host. Read the specific city's code before you buy.
Sierra foothill and mountain towns, Yosemite gateway communities, Tahoe-Truckee and some Monterey Bay and Santa Cruz County locations that issue permits.
On some programs, yes, through a third-party revenue projection. Booking history usually carries more weight on a refinance.
They are common on mountain properties and are acceptable, but septic capacity can limit guest counts in the permit, which affects revenue.
The minimum is 620. Stronger credit and lower leverage can improve terms.
Yes, including cash-out on some programs. See our STR refinance page.
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