California
DSCR loans in California
Our home state — and the hardest DSCR math in the country. Most CA deals start under 1.0. Here's the playbook for closing them anyway.
The honest California picture
Let's not pretend: at 75% leverage and market rent, a large share of California properties ratio below 1.0. Prices ran ahead of rents for a generation. If a lender's website implies CA single-families routinely pencil at 1.2, they haven't run the numbers — or they're hoping you haven't. The real question in this state isn't "does it hit 1.0" — it's "which structure makes this deal work."That's a solvable problem, and solving it is most of what a California DSCR desk does all day.
The sub-1.0 playbook
Five structures carry most California DSCR deals: bigger down payments (the blunt instrument — 35–40% down fixes a lot of ratios), interest-only periods (the payment the ratio is measured against drops immediately), sub-1.0 program tiers (published minimums at 0.80 and 0.75 with stronger credit or leverage), No-Ratio programs (no minimum at all — the deal stands on equity and credit), and 2–4 unit properties, which simply pencil better per dollar of purchase price across most CA metros. Duplex-to-fourplex is the quiet sweet spot of California DSCR lending.
The ADU advantage — California's cheat code
California's ADU boom created a genuinely local underwriting edge: on some programs, permitted ADU rent counts in the ratio. A house at 0.85 on its own becomes a 1.05+ once the back-unit rent is in the math — same property, different program, closed deal. Programs differ on whether and how they count it (and unpermitted units don't count anywhere), so this is a program-matching exercise — exactly what the Analysis is for.
Carrying costs: one break, one landmine
The break is Prop 13:your tax assessment anchors to your purchase price and grows at most ~2% a year — the only major investor state where a hot market can't inflate your tax line. The landmine is fire-zone insurance:in mapped wildfire severity zones, standard carriers have retreated and FAIR-Plan-plus-wrap placements can run multiples of a normal premium — inside the payment your ratio is measured against. Same discipline as Florida: in the hills, real insurance quote first, offer second. And underwrite rent growth to AB 1482's cap (5% + CPI, max 10%) on covered properties rather than whatever the pro forma hopes.
What California investors need to qualify
The national core applies — 20–25% down, credit floors near 620–640, 3–12 months reserves, LLC vesting standard (full detail on the DSCR requirements guide) — but plan California-style: assume the ratio conversation, bring more down or an IO appetite, and know your property's fire-zone status and ADU/permit story before underwriting asks. This is our home market — the Analysis here comes with home-field context.
Under 1.0 isn't a no in California. It's a structure question.
Enter the address — we pull estimated value and market rent, compute your DSCR and LTV live, and a California specialist maps which structures and programs make your deal work. Free, about 30 seconds.
California DSCR FAQ
What are DSCR loan requirements in California?
The national core: typically 20–25% down, credit floors around 620–640, 3–12 months of reserves, LLC vesting standard. The honest California difference: at those terms many CA properties ratio under 1.0 at market rent — so the requirements conversation here is really about the sub-1.0 tiers (0.75–0.80 minimums), No-Ratio programs, interest-only structures, and bigger down payments that make CA deals work.
What are DSCR loan rates in California?
DSCR pricing is built per deal — ratio, LTV, credit, property type, prepay structure — not posted by state. California's volume means every program competes here; the state itself isn't a pricing penalty. A free DSCR Analysis shows what your scenario supports (we don't quote rates on this site).
Can ADU rent count toward my DSCR?
On some programs, yes — and in California that single guideline can decide the deal. A property whose main-house rent ratios at 0.85 can clear 1.0 once a permitted ADU's rent is counted. Programs differ on whether and how they count ADU income, which is exactly the kind of program-matching a DSCR Analysis does.
How does AB 1482 rent control affect DSCR loans?
California's statewide cap (5% plus CPI, maximum 10%, on most properties 15+ years old) doesn't change how the lender computes your DSCR — that's today's rent against today's payment. It changes your pro forma: underwrite growth assumptions to the cap, and know that single-family homes owned by individuals (not corporations or REITs) are generally exempt when properly noticed.
What about fire-zone insurance?
The deal-breaker question in the hills and canyons. Standard carriers have pulled back from wildfire zones, pushing properties to the FAIR Plan plus a wrap policy — often at multiples of a standard premium. That inflated insurance line sits inside your payment and eats ratio directly. In mapped fire severity zones, get the real insurance quote before you write the offer, not after.
Does Prop 13 help investors?
Meaningfully. Your assessment is anchored to what you paid (roughly 1.1–1.25% all-in initially, varying by county and local bonds) and can only grow about 2% per year — so unlike Florida or Texas, a hot market can't inflate your tax line. Your biggest carrying cost is predictable for as long as you hold. It's one of the few structural breaks CA gives a landlord.
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