Loading
Loading
South Pasadena attracts investors who want stable tenants near top schools and Pasadena's job centers. Properties here rent consistently, which matters when your loan approval depends entirely on rental income.
DSCR loans ignore your tax returns and focus on one number: monthly rent divided by monthly mortgage payment. If that ratio hits 1.0 or higher, most lenders approve you regardless of what your 1040 shows.
This loan type works especially well for South Pasadena's duplex and triplex inventory. You can use projected rent on vacant properties, so you don't need an existing tenant to qualify.
DSCR Loans in South Pasadena
You need a 1.0 DSCR minimum at most lenders—meaning rent covers the full mortgage payment. Some lenders go as low as 0.75 DSCR if you put 25% down and have strong credit.
Expect 20-25% down, a 640 credit score floor, and six months of reserves. The property must be investment-only; you can't live there and claim owner-occupant benefits.
These loans close through LLCs without triggering due-on-sale clauses. That's a major advantage if you hold properties in entities for liability protection.
Local decision guide
Use this guide to connect dscr loans eligibility, lender expectations, and local market factors before comparing payment options in South Pasadena.
South Pasadena attracts investors who want stable tenants near top schools and Pasadena's job centers. Properties here rent consistently, which matters when your loan approval depends entirely on rental income.
DSCR loans ignore your tax returns and focus on one number: monthly rent divided by monthly mortgage payment. If that ratio hits 1.0 or higher, most lenders approve you regardless of what your 1040 shows.
This loan type works especially well for South Pasadena's duplex and triplex inventory. You can use projected rent on vacant properties, so you don't need an existing tenant to qualify.
DSCR pricing varies wildly between lenders because each one calculates rental income differently. Some use appraiser rent estimates, others demand a signed lease, and a few accept market rent schedules.
We track about 40 non-QM lenders who price DSCR loans. Rate spreads between the cheapest and most expensive option regularly hit 1.5 points on identical deals.
Foreign nationals can qualify for DSCR loans at certain lenders, but expect higher rates and 30-35% down. That makes South Pasadena's strong rental market even more important.
Portfolio lenders sometimes waive the DSCR requirement entirely if you bring 30% down and have substantial liquid assets. Those deals don't hit rate sheets—you have to ask.
Most borrowers overpay on DSCR loans because they assume all non-QM lenders price the same. They don't. I've seen rate differences of $400 monthly on a $750K loan just by switching lenders.
The appraisal matters more here than on any other loan type. If the appraiser's rent estimate comes in low, your DSCR drops and your rate jumps. We order appraisals from firms that understand South Pasadena's rental market.
Lenders count 75% of projected rent, so a property that should rent for $4,000 only shows as $3,000 income in their calculation. Plan your numbers accordingly before making offers.
If you're refinancing a property you already own, some lenders will use your current lease instead of an appraisal rent estimate. That can boost your DSCR if you locked in a strong tenant.
Bank statement loans require two years of deposits and still calculate income, which many investors don't want to show. DSCR loans ignore your bank entirely.
Hard money works for fix-and-flip, but rates hit 9-12% and terms max out at 12 months. DSCR loans give you 30-year fixed rates in the 7-8% range for long-term holds.
Conventional investor loans beat DSCR on rate by about 0.75%, but you need to document W-2 income and stay under the 10-property Fannie limit. Most serious investors hit that ceiling fast.
South Pasadena Unified's reputation keeps rental demand strong even in downturns. Lenders recognize that stability when they price your loan.
The city's small size means fewer available investment properties. When you find one, DSCR loans let you close in three weeks without scrambling for tax returns or employment letters.
Proximity to Pasadena's office market supports consistent rent rolls. Your DSCR calculation benefits from that geographic advantage—appraisers see fewer vacancy concerns here.
Properties near the Gold Line stations appraise with higher rent estimates because commuter tenants pay premiums. That directly improves your debt service coverage ratio.
No. DSCR loans require full investment properties with no owner occupancy. You'd need a conventional loan or house hack with FHA financing instead.
Some lenders approve 0.75-0.99 DSCR with higher rates and larger down payments, usually 25-30%. Expect rates about 0.5% higher than standard DSCR pricing.
No. Lenders use appraiser market rent estimates or rent schedules for vacant properties. You can close before finding a tenant.
They take the appraiser's total market rent estimate and multiply by 0.75. That adjusted figure divided by your proposed payment gives your DSCR.
Yes. Most lenders allow cash-out refinances with DSCR loans after six months of ownership. Same DSCR and down payment requirements apply.
Most lenders cap DSCR loans at $3-4 million. A few portfolio lenders go higher with 30% down and strong reserve positions.