DSCR · California
We run your DSCR before you pay for the appraisal.
And we tell you how far the appraiser’s rent can come in under your figure before the DSCR fails.
1 · In one paragraph
A DSCR loan is judged on the property, not on you.
No tax returns. No W-2s. No employer. The rent has to cover the payment, and that is the whole test.
DSCR means debt service coverage ratio. Take the monthly rent and divide it by the monthly payment. The payment includes the loan, the taxes, the insurance and any HOA dues. If the rent is bigger than the payment, the ratio is above 1.00 and the file works.
So a lender never asks what you earn. It asks what the building earns. Consequently a self-employed investor with eight properties is easier to approve here than at a bank.
The catch is small and it decides most files. You do not write the rent figure. An appraiser does. If their number lands under yours, the ratio falls and the loan can fail on a property that has not changed at all.
2 · What qualifies
Six kinds of property, all held for income.
If you live in it, it is not on this list. Every one of these is business purpose, in California.
Single-family rental
One house, let to a tenant. The commonest file we see and the fastest to price.
$75,000 minimum
Two to four units
A duplex through a fourplex. Each unit’s rent counts, so a vacancy in one does not end the file.
Rent roll, all units
Five to ten units
Small multifamily. Still a DSCR product at this size, and still one appraisal rather than a full commercial package.
Up to 10 units
Condominiums
Including non-warrantable ones. A project that fails agency rules is normal here, not a decline.
Warrantable or not
Short-term rentals
Let by the night. The income is read differently, so bring the platform statements rather than a lease.
12 months of history
Held in an LLC
Title in an entity is normal and often preferred. A portfolio across several entities is fine too.
Entity borrowers welcome
3 · Who it is for
Four people this was built for.
Each one is hard to approve at a bank for a reason that has nothing to do with the property.
The buy-and-hold investor
You already own rentals. A bank counts every mortgage against you; a DSCR lender counts each property on its own.
The self-employed borrower
Your tax return shows what your accountant made it show. Here it is never opened.
The foreign national
No social security number and no US credit file. The requirements are different, and they are knowable.
The entity borrower
You hold title in an LLC for liability reasons. That is standard here rather than an exception to argue for.
4 · The boundary
Half of this job is telling people we are the wrong call.
You get that answer in a day, not after six weeks and an appraisal fee.
We can look at this
A rental you hold for income
Let, or ready to let. Business purpose.
One to ten units, California
$75,000 to $6,250,000.
Title in an LLC
Or in your own name. Either works.
A condo that failed agency rules
Non-warrantable is a product here.
A file another lender declined
Bring the reason. Often it is fixable.
We cannot
A home you will live in
That is consumer credit and a different licence.
A second home
Same reason. Referred out.
Construction already started
Lien priority is compromised. Declined by everyone.
Anything needing a bank
Outside what we can broker.
Property outside California
The licence is state-specific.
5 · The number that declines you
You do not write the rent. The appraiser does.
Form 1007 carries the appraiser’s opinion of market rent. Underwriting then uses the lower of that and your signed lease.
So a file that models at 1.15 on your rent can land at 0.96 on theirs. Nothing about the property changed.
6 · Run it yourself
Every figure below already exists.
The lease or the market rent, the taxes, the insurance, the dues. Nothing here waits on a third party.
So this clears the usual 1.00 floor. The appraiser’s rent can come in 13% under your figure before it stops working.
7 · The order
Eight lenders. One sentence. None of them is the one that decides.
Every one leads with the same promise: no income verification. It is true, and it is not the point.
They do not check your income. They check the property’s, to the dollar — and the appraisal that settles it is the thing you pay for first.
8 · What we read
Four documents, read before anyone spends anything.
These four decide the ratio. All four exist today, and none of them costs a fee to look at.
01 · The lease, or the market rent
Your signed lease if there is one. Where the property is vacant, the appraiser’s rent schedule stands in, and underwriting takes the lower of the two.
02 · The tax bill
The county figure, not the seller’s estimate. A reassessment after sale moves the payment and the ratio with it.
03 · The insurance quote
A real quote. In parts of California this line has doubled, and a stale figure quietly breaks the arithmetic.
04 · HOA dues and assessments
Dues sit in the ratio. A special assessment does not, until it does. If the building is also non-warrantable, that is a separate conversation.
Send one property. You get the ratio, the gap and the answer.
No application. No credit pull. No fee. If the answer is no, you have it this week rather than in six.
Questions
The eight we are asked most.
What DSCR do I need to qualify?
Most lenders set the floor at 1.00, meaning the rent covers the payment exactly. Some go to 0.75 with a larger deposit and a higher rate. A ratio of 1.25 or better opens the widest set of options.
Is my personal income really never checked?
Correct. There is no debt-to-income calculation, no W‑2 and no tax return in a DSCR underwrite. Your credit score and your reserves still matter, and the property still has to carry itself.
Can I borrow in an LLC?
Yes, and it is the normal structure. DSCR lending is business-purpose lending, so an LLC, corporation or trust holding an investment property is the expected borrower rather than an exception.
What if the property is vacant?
Market rent from the appraiser’s Form 1007 is used instead of a lease. On a condo there is a prior question — whether the project is financeable at all, which is decided before your ratio is looked at. This is the case where reading first matters most, because there is no signed number to rely on.
What happens if the rent schedule comes in low?
The numerator falls while taxes, insurance and dues stay where they are, so the ratio drops. It is the most common reason a file that looked fine is declined. We tell you how much room you have first.
Do you charge to look at the file?
No. Reading the documents and running the ratio happens before anything is ordered and before anything is owed.
Can you help if another lender already declined me?
Often, yes — but the first useful step is finding out exactly which number or which rule stopped the file. A decline with no reason attached is not information.
Is a short-term rental treated differently for DSCR?
Yes. Short-term income is assessed differently from a twelve-month lease, the set of lenders is narrower, and some treat heavy short-term use as a different property class entirely.
Send the file
Tell us the property. We will tell you the number.
No application, no credit pull, no fee. If the answer is no, you will have it this week rather than in six.
- The lease, or the address if it is vacant
- The loan amount you have in mind
- Taxes, insurance and any HOA dues
- Anything a lender has already told you
Nothing is ordered and nothing is owed until you say so.
Primary sources, worth reading yourself: CFPB 12 CFR 1026.3(a), the business-purpose exemption · 12 CFR 1026.43, Ability to Repay · Fannie Mae B3-3.8-01, rental income · Freddie Mac Guide 5306.1 · IRS Publication 527, residential rental property · FHFA conforming loan limits · FRED, US rental vacancy rate · Census Housing Vacancies and Homeownership · California DFPI · NMLS Consumer Access
12 · The long version
What a DSCR loan actually is, and where the arithmetic breaks.
Everything above in full, for the reader who wants to check the numbers rather than take them.
The ratio, and what goes in it
A DSCR loan is an investment property loan that qualifies on the property’s rental income rather than the borrower’s personal income. DSCR stands for debt service coverage ratio. It is the rent the property brings in, divided by the payment that rent has to cover.
That single number is the underwrite. Your own income is never calculated. No W‑2, no tax returns, no debt-to-income, no employment check. It is why a self-employed investor with ten write-offs and a strong rental can be straightforward here and difficult everywhere else.
Most people get the ratio wrong because they divide rent by the mortgage payment alone. The payment in the denominator is usually principal, interest, taxes, insurance and any homeowners association dues. On a condo, dues can be the line that decides it — and if the project itself is non-warrantable, the dues are not what stopped the file.
Who writes the rent figure
Rent in the numerator is the lower of the signed lease and the market rent an appraiser puts on Form 1007 — the method both agencies set out for rental income, and the one non-agency lenders borrow. Every rule a lender checks alongside it — the floor, the deposit, the reserves, the prepayment — is set out in full on our DSCR loan California reference. If your lease is above market, the lease is not what gets used. If the unit is vacant, the 1007 is the only figure there is — which is precisely why it should be estimated before an appraisal is ordered, not after.
The ratio is broken by the other half of the appraisal: Form 1007, the rent schedule. Underwriting uses the lower of your signed lease and the appraiser’s opinion of market rent. If the appraiser puts your unit at $2,850 and you modelled $3,200, the numerator falls eleven per cent while every cost in the denominator stays exactly where it was.
Where the floor sits, and what the room is worth
Comparing rates assumes the deal works. Most declined files were never a pricing question — they were a ratio question that nobody ran until the lender did. A quarter point saved on a loan that does not close is worth nothing, and six weeks spent finding that out is worth less than nothing.
The four documents, in detail
California insurance premiums on investment property have risen sharply in several counties, and insurance sits inside the payment. A quote from eighteen months ago can move a ratio by a tenth on its own.
If your rental is a condo, the building has to clear project review as well as the property clearing the ratio. From 4 January 2027 the minimum reserve contribution rises from ten to fifteen per cent of the annual budget. That is a separate test, and passing one says nothing about the other.
Where the arithmetic breaks
Most people assume a low valuation is what breaks a DSCR file. It usually is not. If the value comes in under contract the loan shrinks, and a smaller loan means a smaller payment, which if anything improves the ratio. What a low valuation really costs you is cash, because you make up the difference.
The ratio is the underwrite, but it is not the whole file. Credit score sets the pricing tier, and the difference between a 680 and a 740 on the same property is real money over the term. Reserves matter too: most lenders want several months of the full payment held after closing.
The boundary, and why it exists
We do not quote rates on a web page, we do not take applications here, and we do not promise an approval. We read what you have, we run the arithmetic, and we tell you what it says — including when it says no.
