California DSCR Loans
Qualify on Rental Income, Not Yours

A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on the property's rental income rather than personal income. The DSCR is calculated by dividing the property's gross rental income by the total mortgage payment (principal, interest, taxes, insurance, HOA). A DSCR of 1.0 means the rent exactly covers the payment. Most lenders require 1.0+, though some offer 0.75 DSCR programs for properties in high-appreciation markets.

DSCR loans require minimal documentation: property appraisal with rent schedule, 2 months bank statements (for reserves verification), credit report, entity documents (if using LLC), and property insurance quotes. You do NOT need tax returns, W-2s, pay stubs, or employment verification. This makes DSCR loans ideal for self-employed investors and those with complex tax situations.

Most DSCR lenders require a minimum 660 credit score, with 700+ needed for the best rates and terms. Borrowers with 740+ scores often qualify for rate reductions of 0.25-0.5%. Some portfolio lenders offer DSCR loans down to 620 with higher down payments and rates.

DSCR = Monthly Rental Income ÷ Monthly Mortgage Payment (PITIA). For example, if a property rents for $4,000/month and the total payment (principal, interest, taxes, insurance, association dues) is $3,500/month, the DSCR is $4,000 ÷ $3,500 = 1.14. Lenders typically use the lesser of actual rent, market rent from appraisal, or lease rent.

DSCR loans typically require 20-25% down payment. Some lenders offer 15% down programs for borrowers with 740+ credit and 1.25+ DSCR. Unlike conventional or FHA loans, there are no 3.5% or 5% down DSCR options because these are non-QM investment property loans with higher risk profiles.

DSCR loans typically close in 14-21 days, significantly faster than conventional loans (30-45 days). The streamlined process skips income verification, employment calls, and tax return analysis. Some lenders offer rush closings in 10 days for time-sensitive deals with an additional fee.

Yes! Many DSCR lenders now offer short-term rental programs that use projected Airbnb/VRBO income for qualification. These typically require 12-month income projections from AirDNA or similar platforms, 25% down payment, and may have geographic restrictions in California markets with strict STR regulations.

DSCR loans are better if you: have complex/self-employed income, already have 5-10 conventional mortgages, need faster closing, or want to avoid DTI limits. Conventional loans are better if you have simple W-2 income, fewer than 5 financed properties, and can document income. DSCR rates are typically 0.5-1% higher than conventional.