6 Most Popular DSCR Loan Lenders in California

As one might expect, the real estate market in California is booming. 54.6% of Californians own their house while 45.4% rent, according to Housing Vacancies and Homeownership from the US Census. Only 4.1% of rentals are open suggesting a really tight market. Median price for a SFH in California for July 2022 is $833,910 and a Condo is $645,000 according to the California Association of Realtors.

Those numbers are only second in home value to those in New York. Investors looking for a reliable place to entrust their savings won’t find better than the Golden State.

How DSCR loans work

Debt Service Coverage Ratio Loans, or DSCR loans, enable investors to purchase property by evaluating the potential income of renting the property. If the properties’ net operating income exceeds its total debt obligations, then that property will have a DSCR ratio of 1.0 or greater. Good DSCR ratios show that a borrower can reliably pay their obligations through short-term or long-term cash flow on the investment property.

DSCR loans are much quicker to close because they do not look into the financial details of the borrower themselves. Borrowers interested in a DSCR loan do not provide their tax returns or bank statements. As such, they are available to foreign nationals, foreign aliens, and LLCs. Financial institutions think these loans work because it allows them to sell mortgages quickly and for multiple investment properties at once while still remaining confident that the loans will be repaid. A Borrower only needs the market research for a reliable DSCR ratio and the principal down payment.

Top 6 most popular California DSCR loan lenders

These are the DSCR lenders that we found during our research that offer DSCR Programs in the state of California.

1. New Silver

New Silver started in 2019 by Kirill Bensenoff and Alex Shvayetsky. They offer a variety of private money lending products like fix and flip, rental, ground up and personal loans.

We contacted New Silver Lending to learn more about their private lending business and here are some of the highlights:

• Origination fee from 1.875%
• Loan to cost up to 90%
• 100% construction financing available
• Loan to ARV up to 80%
• Terms are typically 24 months
• Loan amounts are from $100,000 to $5 million
• Minimum FICO score is 650
• No hard credit pull required

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

2. Griffin Funding

Griffin Funding is a national mortgage company that specializes in the types of loans that are hard to find, such as VA Home home loans, bank statement loans for the self-employed or DSCR loans for real estate investors. They are licensed to work in 21 states and are rapidly expanding.

We contacted Griffin Funding to learn more about their DSCR loans in general and here is what we found:

• No income or job history verification required
• No limits on the number of properties
• Loan amount up to $5 million
• Minimum 20% down required
• Interest-only option available
• Both long-term and short-term rentals are eligible
• No reserve required on cashout loans. Six months required on all other loans unless DSCR ratio is less than 1.

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

3. Angel Oak

Angel Oak is a full-service private money lender that focuses on mortgage products, traditional and non-traditional (non-QM) products. They have platforms to provide both retail lending and direct lending.

We contacted Angel Oak directly to learn more about their DSCR loan program and here are some things to consider:

• Maximum loan amount up to $1.5 million
• No income or employment information required
• Short-term rentals and VRBOs allowed
• Properties can be in LLC’s name
• No limit on number of properties
• 40 year fixed interest-only available
• Non-warrantable condos allowed
• Purchase, cash-out or rate-term refinance

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

4. Sprint Funding

Sprint Funding started in 2006 and mainly focuses on mortgage products, such as conventional, VA and FHA loans. Founded by Josh Craven, the company has expanded to DSCR loans and that’s particularly what we were interested in exploring.

We reached out to Sprint Funding to get more details about their DSCR loan program and here are some things we discovered:

• Can close loans as fast as 1 week
• Has a six-month DSCR loan for short-term financial assistance. Requires a minimum DSCR ratio of 1.25X.
• Qualify based on the income from the property

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

5. MortgageVintage

Founded by Sandy MacDougall, MortgageVintage is based in California and serves the state with residential and commercial business purpose real estate loans, including a DSCR loan program.

We contacted MortgageVintage to learn more about their DSCR loan program and here are some key terms and highlights:

• 1-4 unit residential properties
• Minimum FICO is 620
• Loan Amounts: $70,000-$3,500,000
• Property Type: Residential
• Loan Type: Purchase, Rate/Term or Cash-out
• Loan-to-Value: Up to 80% LTV on Purchase and R/T; Up to 75% LTV on Cash-Out
• Terms: 30 Year Amortization – 7/6 ARM, 10/6 ARM and 30 Year Fixed
• Underwriting: No Income Verification, No Employment Verification and No DTI Ratios
• Points & Fees: 2+ Points plus Underwriting & Valuation of $1,995

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

6. Tuss Financial Group

Founded by Jeff Miller and Jason Nichols, Tuss Financial Group focuses on serving business owners and has been in business for over 20 years. They specialize in stated income mortgages and have served thousands of business owners, according to their website.

We asked Tuss Financial Group for details on their DSCR loans and here is what they said:

• Loans are based on the debt service coverage ratio
• No ratio loans with 25% equity and strong FICO scores
• 30-year-fixed rate from $100,000 up to $3 million
• No tax returns of 4506 required

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

What are the main advantages of a California DSCR loan?

For investors examining a DSCR Loan it is important to consider your long-term goals and investment needs. For borrowers looking to own rental properties or who have low credit scores a DSCR loan might not be the best choice. Additionally, since DSCR loans are for property, it may not be prudent for an investor who needs liquidity with their portfolio. However, for investors with decent-to-good credit looking to invest in real estate or become a renter, DSCR loans may be a great opportunity. 

By far the greatest reason to use a DSCR loan in California is because it allows a borrower to get a foot in the door of the real-estate market through the 45.4% of the population that is renting single-family or multifamily properties in the state. A DSCR mortgage can be a great resource since you can rely on a stable population of tourists for short-term renting and a large native population for long-term renting. Property prices in California are also likely to retain the value in the long-term because the demand for housing is high.

Another strong point for DSCR loans is that most people will have eligibility for multiple properties per loan. This means that a borrower could attempt to tap into different neighborhoods in a city, multiple property types to appeal to different kinds of renters, or even split their investment across multiple California cities. Investing this way could also work as a safeguard against a downward turn in the market. 

For borrowers looking to jump into the market quickly DSCR loans are typically approved in weeks, not months. Most lenders let you choose between fixed-rate, adjustable-rate, or interest-only mortgages with your DSCR loan, allowing you the freedom to choose an interest rate program that makes sense for your mortgage payment.

If you’re looking to explore hard money in other states, check out our national overview of DSCR loans as a starting point in your search.

Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.