The Asset Qualifies.
Not the Borrower.

What Is a DSCR Loan in California?

A DSCR loan — Debt Service Coverage Ratio loan — is a type of investment property mortgage that qualifies based on the property's rental income rather than the borrower's personal income. Traditional lenders require W2 statements, tax returns, and employment verification. DSCR lenders look at one thing: does the property generate enough rent to cover the mortgage?

If the monthly rent divided by the total monthly mortgage payment (principal, interest, taxes, insurance, and association dues) equals 1.25 or higher, the deal qualifies. No W2. No tax returns. No pay stubs.

DSCR loans are available nationwide, including California. They are the primary financing tool for investors who have hit the conventional loan limit, are self-employed, or hold income in an LLC rather than personal W2 income.

DSCR Loan Requirements in California

DSCR loans in California are non-QM investment property loans. The qualification criteria differ significantly from conventional financing. Here is what lenders evaluate:

• Minimum credit score: 620–660 to qualify. Scores of 680+ yield better rates and terms.
• Minimum down payment: 20–25% of the purchase price. Most programs require 25% for investment properties.
• DSCR ratio: Minimum 1.0 — meaning rent exactly covers the mortgage. Wexmoor Circle targets 1.25x or higher for optimal deal structure and rate.
• Maximum LTV: 70–80% for purchases. Wexmoor Circle underwrites to 75% maximum, targeting 65–70%.
• Reserves: Most lenders require 3–6 months of mortgage payments held in liquid reserves after closing.
• Property type: Investment properties only — not primary residences. Single-family rentals, multifamily, mixed-use, light industrial, short-term rentals.
• Entity eligible: Loans can close in individual name, LLC, or trust.

Mortgage origination for DSCR loans is provided through licensed bank partners and Brokers Capital Group, Inc. CA DRE #02179896 · NMLS #2350416.

How Is DSCR Calculated?

DSCR is calculated by dividing the property's monthly gross rental income by the total monthly mortgage payment. The mortgage payment includes principal, interest, property taxes, hazard insurance, and HOA dues — referred to collectively as PITIA.

Formula: DSCR = Monthly Gross Rent ÷ Monthly PITIA

A DSCR of 1.0 means rent exactly covers the mortgage. A DSCR of 1.25x means rent covers the mortgage with 25% to spare. Wexmoor Circle underwrites to a minimum of 1.25x, targeting 1.35x or higher for optimal deal structure.

Do I Need a W2 for a DSCR Loan?

No. DSCR loans do not require W2 income verification. The lender underwrites the property — not the borrower. This makes DSCR loans the primary financing tool for three types of investors:

• Self-employed investors whose tax returns show lower income due to deductions
• Portfolio investors who have hit the conventional loan limit at property 3 or 4
• LLC-structured investors who hold properties in entities and do not draw W2 salary

The only documentation requirement is proof of rent — either a signed lease agreement or a rental income history. The asset qualifies the deal.

What DSCR Ratio Do I Need to Qualify?

Wexmoor Circle underwrites to a minimum DSCR of 1.25x, with a target of 1.35x or higher. The higher the DSCR ratio, the stronger the deal — and the better the rate and terms from the bank partner.

A DSCR below 1.0 means the property does not cover its own debt service and will not qualify regardless of the borrower's income. A DSCR between 1.0 and 1.24 typically requires additional reserves or a larger down payment. At 1.25x and above, the deal enters our standard underwriting pipeline.

What Is the Maximum LTV for a DSCR Loan in California?

Wexmoor Circle underwrites to a maximum LTV of 75%, with a target of 65–70%. LTV — loan-to-value ratio — is the loan amount divided by the property's appraised value or purchase price, whichever is lower.

A lower LTV means more equity in the deal. This improves the DSCR ratio by reducing the monthly mortgage payment and signals lower risk to the lender. Most DSCR programs require a minimum down payment of 20–25% of the purchase price.

DSCR Loan Terms ─ Interest-Only, 40-Year, and Cash-Out Options

DSCR loans offer term flexibility that conventional investment loans do not. Three options are worth knowing:

• Interest-only DSCR loans: Available on select programs. Lower monthly payment improves your DSCR ratio during the hold period. Common on value-add deals where income will increase at stabilization.
• 40-year DSCR loans: Available through non-QM lenders. The extended amortization reduces the monthly PITIA, which directly improves the DSCR ratio. Useful when a deal is close to the 1.25x threshold.
• Cash-out refinance DSCR: Pull equity from a stabilized investment property without documenting personal income. The property's rental income qualifies the new loan. Common strategy for funding the next acquisition without liquidating the asset.

Wexmoor Circle structures deals through United Business Bank and American Pride Bank — both offer judgment-based underwriting on DSCR, interest-only, and non-QM term structures. Every deal gets a direct read before formal submission.

Can I Get a DSCR Loan With 3 Rental Properties?

Yes. Unlike conventional loans — which cap investors at 4 financed properties under standard Fannie Mae guidelines — DSCR loans have no portfolio limit. Each property is underwritten individually based on its own DSCR ratio and LTV.

An investor with 3 rental properties who submits a 4th deal for DSCR financing is evaluated purely on the new property's numbers. Existing portfolio properties do not count against the new loan. This is the primary reason DSCR loans have become the go-to structure for California investors scaling beyond the conventional limit.

What Property Types Qualify for DSCR in California?

DSCR loans are available for income-producing investment properties. The most common asset classes Wexmoor Circle works with in California include:

• Multifamily 5+ units — apartment buildings and small multifamily
• Mixed-use properties — retail or office on ground floor, residential above
• Single-family rentals — investment properties only, not primary residences
• Light industrial — warehouse and flex space with verifiable lease income
• Retail strip — NNN and gross lease income-producing retail

Short-term rentals — Airbnb, VRBO, and vacation rentals are eligible in high-demand California markets including Palm Springs, Joshua Tree, Lake Tahoe, and the Los Angeles coastal corridor. Market rent analysis from a licensed appraiser is used in place of a lease agreement for STR properties.

Properties that do not qualify: raw land (no rental income), primary residences, hospitality, special-use properties (churches, gas stations), and properties with no verifiable rent history.

DSCR Loan vs Conventional Loan — What's the Difference?

Factor	Conventional Loan	DSCR Loan
Qualification basis	Borrower's W2 and personal income	Property's rental income
Income docs required	W2, tax returns, pay stubs	Lease agreement or rent history
Portfolio limit	4 financed properties (Fannie Mae)	No portfolio limit
Self-employed eligible	Difficult — 2 years tax returns required	Yes — no personal income required
LLC eligible	Generally no — individual borrower required	Yes — LLC and entity structures OK
Primary qualifier	DTI ratio (borrower's debt-to-income)	DSCR ratio (property income vs debt)

For a deeper comparison, read DSCR Loan vs Conventional Loan California — What's the Difference?

How Wexmoor Circle Underwrites DSCR Deals

Every DSCR deal submitted to Wexmoor Circle goes through the same underwriting model before reaching our bank partners. The process starts with the asset — not the borrower.

• Step 1 — NOI calculation: Trailing 12 months actual rent or T3 annualized for stabilizing properties, less market vacancy and 5% credit loss minimum
• Step 2 — DSCR test: Monthly NOI divided by monthly PITIA must equal 1.25x or higher
• Step 3 — LTV test: Loan amount divided by appraised value must be 75% or lower
• Step 4 — Stress test: We run the DSCR at the current rate plus 50 basis points to ensure the deal holds under rate movement
• Step 5 — Bank submission: Qualifying deals go to United Business Bank or American Pride Bank — both underwrite on judgment, not a fixed credit matrix

Every deal is reviewed personally by Irakli Ezugbaia. No automated decline. No committee. If the asset makes sense, we find a path forward.

How Fast Can a DSCR Loan Close?

DSCR loans close faster than conventional investment property loans because there is no personal income verification, no W2 processing, and no employment confirmation. The underwriting is focused on the asset ─ which streamlines the timeline significantly.

A well-prepared DSCR deal ─ clear title, executed lease, clean appraisal ─ can close in 15─21 business days. Compare that to 30─45 days for a conventional investment loan that requires full income documentation review. For time-sensitive acquisitions, the speed advantage is meaningful.

Who Provides the DSCR Financing?

Wexmoor Circle structures DSCR deals through two licensed bank partners:

• United Business Bank (UBB) — FDIC member. SBA 7(a) and 504. Multifamily and mixed-use appetite. Judgment underwriting. Active in California, Colorado, Nevada, New Mexico, and Washington.
• American Pride Bank (APB) — FDIC member. DSCR, P&L, and alt-doc programs. OTC construction financing. Self-employed and investor-friendly. Nationwide via APB Wholesale.

Both banks underwrite on judgment — not a fixed credit score cutoff. Every deal gets a real read from a human underwriter, not an automated decision engine.

Mortgage origination services are provided through Brokers Capital Group, Inc. CA DRE #02179896 · NMLS #2350416.

DSCR Loan Rates in California — What to Expect

DSCR loan rates in California typically range from 5.75% to 9%+ depending on credit score, LTV, DSCR ratio, and loan term. Rates carry a premium over conventional investment property loans — typically 0.5% to 1.5% higher — because DSCR loans are non-QM products held on lender balance sheets rather than sold to Fannie Mae or Freddie Mac.

The rate you receive is directly influenced by three factors: the strength of your DSCR ratio (higher is better), your credit score (680+ yields meaningfully better pricing), and the LTV (lower LTV reduces lender risk and improves rate). A deal with a 1.40x DSCR, 680 credit score, and 65% LTV will price significantly better than a deal at the minimum thresholds.

Wexmoor Circle does not disclose specific rates publicly — fee structure is case-by-case with our bank partners. Every deal gets a direct read from Irakli before formal submission.

Frequently Asked Questions

Wexmoor Circle LLC | Irakli Ezugbaia · CA DRE #02271654 · NMLS #2728634 · NMLS Consumer Access · CA DRE Verify
Mortgage origination and lending services are provided through licensed bank partners and Brokers Capital Group, Inc. CA DRE #02179896 · NMLS #2350416. Information on this website is for general informational purposes only and does not constitute legal, financial, or investment advice. Programs, terms, and availability are subject to change without notice. Equal Housing Opportunity.