California real estate investors have a financing problem. The state's high property values make traditional mortgage qualification nearly impossible for many investors — income limits, Fannie Mae's 10-property cap, and strict DTI requirements shut out the very investors who know the market best.
DSCR loans solve this. You qualify based on the property's rental income — not your personal income, not your tax returns, not how many properties you already own.
DSCR stands for Debt Service Coverage Ratio. It measures whether a property's rental income covers its mortgage payment. The formula is simple:
Monthly Rental Income ÷ Monthly PITIA = DSCR Ratio
PITIA = Principal + Interest + Taxes + Insurance + HOA (if applicable).
A DSCR of 1.0 means the rent exactly covers the payment. A DSCR of 1.25 means the property generates 25% more income than the payment. A DSCR of 0.75 means the property covers 75% of the payment — and most lenders will still approve this.
You're buying a single-family rental in Sacramento for $650,000.
Loan amount: $487,500 (25% down) · Rate: 7.75% · Monthly PITIA: ~$3,800
Market rent: $3,800/month
No W-2. No tax returns. No personal income verification whatsoever.
| Requirement | Typical Range | Notes |
|---|---|---|
| Minimum DSCR | 0.75–1.0 | 0.75 available with some lenders at higher rates |
| Minimum credit score | 620–680 | Best rates at 740+ |
| Down payment | 20–25% | 20% possible for strong DSCR |
| Loan amount | $100k–$3M+ | Jumbo available through wholesale |
| Property types | SFR, 2-4 units, condos, STR | Short-term rentals using Airbnb income allowed |
| LLC allowed | Yes | Most lenders allow entity vesting |
| Properties financed | Unlimited | No Fannie Mae 10-property cap |
| Prepayment penalty | 3-5 years typical | Varies by lender and rate |
Business owners who write off significant expenses often show low taxable income on paper — even when they're genuinely wealthy. DSCR lenders don't care about your Schedule C or K-1. If the property cash flows, you qualify.
Multiple income streams, foreign income, or investment distributions that don't fit neatly into a W-2 box? DSCR loans bypass all of that entirely.
Fannie Mae conventional loans cap at 10 financed properties. DSCR lenders evaluate each property independently — there's no cap. Your 11th, 20th, and 50th property can all use DSCR financing.
Privacy is a real consideration for some investors. DSCR loans require no personal income documentation whatsoever — just the property details and your credit profile.
California's short-term rental market — particularly in markets like Palm Springs, Big Bear, Lake Tahoe, and coastal cities — generates income that traditional lenders won't count. DSCR lenders that allow STR income use one of two methods:
For new STR purchases with no income history, most lenders will use a market rent analysis at 75% of the projected amount.
DSCR loans carry slightly higher rates than conventional investment property loans because they're non-QM (non-qualified mortgage) products. Current rate ranges:
| Credit Score | DSCR 1.25+ | DSCR 1.0–1.25 | DSCR 0.75–1.0 |
|---|---|---|---|
| 760+ | 7.25–7.75% | 7.75–8.25% | 8.50–9.00% |
| 720–759 | 7.75–8.25% | 8.25–8.75% | 9.00–9.50% |
| 680–719 | 8.25–8.75% | 8.75–9.25% | 9.50–10.00% |
| 640–679 | 8.75–9.25% | 9.25–9.75% | 10.00–10.75% |
Rate tip: The single biggest lever on your DSCR rate is your credit score. A 740 vs 680 score can mean 0.75–1.00% lower rate — on a $600,000 loan that's $375–$500/month in savings.
DSCR is a non-QM product — meaning retail banks don't offer it. You can only get DSCR loans through specialty lenders, and the best access to those lenders is through a wholesale mortgage broker.
As a wholesale broker we work with over a dozen DSCR lenders simultaneously, including lenders that allow 0.75 DSCR, STR income, LLC vesting, and loans up to $3M. We match your specific scenario to the lender with the best rate and most flexible guidelines for your property.
No personal income needed. Enter your property details and we'll calculate your DSCR and match you with the best lender for your scenario.
Check My DSCR NowYes. DSCR loans don't require prior landlord experience. First-time investors use them regularly, though some lenders prefer borrowers with some real estate experience for lower DSCR ratios.
Yes. Most lenders require 6–12 months of PITIA in reserves after closing. This can come from bank accounts, retirement accounts, or other liquid assets.
Yes, once the prepayment penalty period ends (typically 3–5 years). Many investors use DSCR loans to acquire properties quickly, then refinance into conventional loans later when they need to or when rates improve.
DSCR loans are investment property loans, so mortgage interest is generally deductible as a rental property expense. Consult your CPA for your specific situation.
Making Mortgage Easy is a licensed California wholesale mortgage broker. NMLS# 1082653 · DRE# 02244476 · Shield Home Loans Inc. NMLS# 2396589. Rates shown are illustrative ranges as of April 2026 and are subject to change. This content is for informational purposes only and does not constitute financial or investment advice.