Question 1

What DSCR ratio do I need for a Santa Cruz rental property?

Accepted Answer

Most lenders want 1.0 minimum, meaning rent covers the full payment. You'll get better rates and terms at 1.25 or higher.

Question 2

Can I use DSCR for a vacation rental near the beach?

Accepted Answer

Yes, but not all DSCR lenders accept short-term rentals. I screen lenders for this upfront since Santa Cruz has strong vacation rental demand.

Question 3

Do DSCR loans work for student housing near UCSC?

Accepted Answer

They work well if structured right. Some lenders won't touch 4+ unrelated tenants, so property type matters in lender selection.

Question 4

How much down payment do I need for a DSCR loan?

Accepted Answer

Expect 20-25% minimum. Higher down payments improve your rate and make approval easier on borderline DSCR ratios.

Question 5

What's the rate difference between DSCR and conventional investor loans?

Accepted Answer

DSCR rates run 1-2% higher than conventional. You pay that premium to skip income documentation and qualify on rent alone.

Question 6

Can I do a cash-out refinance with a DSCR loan?

Accepted Answer

Yes, it's common in Santa Cruz. Investors pull equity without showing personal income, then use it for another investment property.

DSCR Loans in Santa Cruz: Qualify on Rental Income, Not W-2s