Question 1

What DSCR ratio do I need for a San Luis Obispo rental property?

Accepted Answer

Most lenders require a minimum 1.0 DSCR, meaning rental income covers the mortgage payment. A 1.25 ratio or higher typically qualifies for better rates and terms.

Question 2

Can I use projected rent for a property I'm purchasing?

Accepted Answer

Yes, lenders accept market rent analyses from licensed appraisers. The appraised rental value determines your DSCR calculation for non-occupied properties you're acquiring.

Question 3

Do DSCR loans work for properties near Cal Poly?

Accepted Answer

Yes, student rental properties qualify well. Strong demand near campus supports reliable rental income, which is exactly what DSCR underwriting evaluates for approval.

Question 4

How do San Luis Obispo's vacation rental rules affect DSCR loans?

Accepted Answer

Short-term rentals face city restrictions in residential areas. Lenders may also apply income haircuts to Airbnb-style properties, making traditional rentals simpler to underwrite.

Question 5

What credit score do I need for a DSCR loan here?

Accepted Answer

Minimum scores typically start at 620, but 680 or higher secures better pricing. Your property's DSCR ratio matters more than credit score in the approval decision.

DSCR Loans in San Luis Obispo: Income-Based Financing for Rental Property Investors