Best DSCR Lenders in California 2026
Find the best DSCR loan lenders in California. Compare rates, LTV options, and requirements for investment property financing in Los Angeles and beyond.
NonQM Lending Team
Expert Contributor
Best DSCR Lenders in California: 2026 Complete Guide
If you are a real estate investor looking to finance rental properties in California, DSCR (Debt Service Coverage Ratio) loans offer a streamlined path to approval. Unlike conventional mortgages, DSCR loans qualify you based on the property's rental income rather than your personal income, making them the preferred financing tool for serious investors.
California is the largest Non-QM market in the nation with high property values and a massive self-employed workforce, and DSCR loans are among the most popular Non-QM products in the state. With 150+ licensed Non-QM lenders operating across California, competition keeps rates competitive and terms favorable.
What Is a DSCR Loan?
A DSCR loan measures whether a property's rental income can cover its mortgage payment. The formula is straightforward:
DSCR = Monthly Rental Income / Monthly Mortgage Payment (PITIA)
A DSCR of 1.0 means the rent exactly covers the payment. Most California lenders require a DSCR between 1.0-1.25, though some programs accept ratios as low as 0.75 with compensating factors.
Why California Is Ideal for DSCR Loans
California offers several advantages for DSCR loan investors:
- Median home price of $793,000 provides strong entry points for investors
- Average rent of $2,850/month supports healthy DSCR ratios
- 150+ licensed Non-QM lenders create competitive pricing
- Strong population growth drives sustained rental demand
Top California Markets for DSCR Loans
The strongest DSCR loan markets in California include Los Angeles, San Diego, Sacramento, Riverside. Each offers different risk-return profiles for investors.
| Market | Median Price | Avg Rent | Typical DSCR | Investor Appeal |
|---|---|---|---|---|
| Los Angeles | $793,000 | $2,850 | 1.15-1.30 | High demand, appreciation |
| San Diego | $674,050 | $2,565 | 1.20-1.35 | Strong cash flow |
| Sacramento | $594,750 | $2,280 | 1.25-1.40 | Best cash-on-cash |
| Riverside | $713,700 | $2,422 | 1.15-1.25 | Balanced growth |
DSCR Loan Requirements in California
Minimum Requirements
- Credit Score: 620-660 minimum (best rates at 720+)
- Down Payment: 20-25% of purchase price
- DSCR Ratio: 1.0-1.25 (some programs allow 0.75+)
- Property Types: Single-family, 2-4 units, condos, townhomes
- Loan Amounts: $100,000 to $3,000,000+
- No personal income verification required
Rate Comparison by Credit Score
| Credit Score | Typical Rate Range | Max LTV | Notes |
|---|---|---|---|
| 740+ | 7.25-7.75% | 80% | Best available terms |
| 700-739 | 7.50-8.25% | 80% | Strong rates |
| 660-699 | 8.00-8.75% | 75% | Standard terms |
| 620-659 | 8.50-9.50% | 70% | Higher down payment |
Case Study: San Diego DSCR Loan Success
- Borrower Profile:
- Property: duplex in North Park
- Loan Amount: $685,000
- LTV: 75%
- Credit Score: 710
- Monthly Rent: $4,200/month
- DSCR: 1.18
- Approval Time: 21 days from application to closing
This investor qualified based entirely on the property's rental income. No tax returns, no W-2s, no employment verification. The property's cash flow spoke for itself.
How to Choose the Right DSCR Lender in California
When comparing DSCR lenders in California, evaluate these factors:
- Rate competitiveness — Get quotes from at least 3 lenders
- LTV limits — Higher LTV means less cash out of pocket
- Minimum DSCR threshold — Lower minimums give more flexibility
- Closing speed — Top lenders close in 21-30 days
- Property type restrictions — Ensure your property type qualifies
- Prepayment penalties — Understand the terms before committing
Getting Started with DSCR Loans in California
Ready to finance your next California investment property? Start by getting pre-qualified with a DSCR lender who understands the California market.
[Get Pre-Qualified](/get-started) | [Compare California Lenders](/locations/california) | [DSCR Loan Details](/programs/dscr)
Frequently Asked Questions
What is the minimum DSCR ratio required in California? Most California DSCR lenders require a minimum ratio of 1.0-1.25. Some programs accept ratios as low as 0.75 with compensating factors such as a higher credit score (700+) or larger down payment (30%+). A ratio of 1.25 or higher typically qualifies for the best rates.
Can I use short-term rental income for a DSCR loan in California? Yes, many California DSCR lenders accept short-term rental (Airbnb/VRBO) income. Lenders typically use either the property's actual rental history or a third-party rent analysis from services like AirDNA. Short-term rental DSCR loans may require a slightly higher DSCR ratio (1.25+) and larger down payment.
How fast can I close on a DSCR loan in California? Top DSCR lenders in California can close in 21-30 days from application. The process is faster than conventional loans because there is no income verification, no employment verification, and no tax return analysis. The main timeline drivers are the appraisal and title work.
Do I need to be a California resident to get a DSCR loan there? No. DSCR loans in California are available to out-of-state investors. The loan qualifies based on the property's income, not your personal residence. Many California DSCR borrowers are investors from other states who recognize the strong rental market opportunities.
What property types qualify for DSCR loans in California? DSCR loans in California are available for single-family homes, 2-4 unit properties, condos (warrantable and non-warrantable), townhomes, and in some cases, 5+ unit commercial properties. Short-term rental properties and vacation homes may also qualify with certain lenders.
Can I get a DSCR loan with a low credit score in California? DSCR loans in California are available with credit scores as low as 620, though the best rates and terms require scores of 720 or higher. Borrowers with scores between 620-660 should expect higher rates and may need a larger down payment (25-30%) to qualify.
How many DSCR loans can I have at the same time in California? There is no limit on the number of DSCR loans you can hold simultaneously in California. Unlike conventional loans, which cap at 10 financed properties, DSCR lenders evaluate each property independently. Many successful California investors hold 10, 20, or more DSCR loans across their portfolio.
Explore California Non-QM Resources
California Location Hub
Visit our [California Non-QM Lending page](/locations/california) for a comprehensive overview of Non-QM mortgage options across the state, including lender directories, market statistics, and program comparisons.
California City Guides
Explore Non-QM lending options in specific California markets:
- [Los Angeles Non-QM Lenders](/locations/california/los-angeles) — Local lender directory, market data, and neighborhood insights
- [San Diego Non-QM Lenders](/locations/california/san-diego) — Local lender directory, market data, and neighborhood insights
- [San Francisco Non-QM Lenders](/locations/california/san-francisco) — Local lender directory, market data, and neighborhood insights
Related California Articles
- [Bank Statement Loans in California 2026](/blog/bank-statement-loans-california-2026)
- [Non-QM Mortgage Guide in California 2026](/blog/non-qm-mortgage-guide-california-2026)
Loan Program Details
- [DSCR Loan Program Overview](/programs/dscr) — Full program details, requirements, and rates
- [Compare All Non-QM Programs](/compare) — Side-by-side program comparison tool
- [Get Pre-Approved](/get-started) — Start your application today