I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. LLC purchases and DSCR financing for investors is a regular part of my practice. Call (800) 239-1103.
Liability protection, privacy, and estate planning are common reasons California real estate buyers want to purchase property in an LLC. But most residential lenders won’t lend to an LLC — so how does this work? Here are the realistic options.
Why Most Lenders Won’t Lend to an LLC
Fannie Mae, Freddie Mac, FHA, and VA — the agencies that back most residential mortgages — require loans to be made to natural persons (individuals), not business entities. An LLC is a legal entity, not a person. This is why conventional financing into an LLC isn’t possible.
Options That DO Work
Option 1: DSCR Loan to Your LLC (Best for Rentals)
DSCR (Debt Service Coverage Ratio) loans are non-QM products from portfolio lenders — they’re not subject to Fannie/Freddie guidelines. Many DSCR lenders are designed specifically to lend to LLCs, trusts, and corporations. The loan is made in the LLC’s name, qualifies based on the property’s rental income, and requires no personal tax returns. Learn more about DSCR loans in California.
Option 2: Commercial Portfolio Loan
Some community banks and credit unions offer portfolio loans (they hold the loan instead of selling it) that can be made to an LLC for 1–4 unit residential properties. Terms are typically shorter (10–25 years), rates slightly higher, and qualification is based on both the entity’s finances and personal guarantees.
Option 3: Personal Loan + Post-Close Transfer (Risky)
Get a conventional mortgage in your name, then transfer title to your LLC after closing via a quitclaim deed. Technically possible, but it triggers the due-on-sale clause. Most lenders won’t enforce it on investment properties, but there’s no guarantee. Not recommended without legal advice and full understanding of the risk.
Option 4: Revocable Living Trust (For Primary Homes)
Not an LLC, but serves similar estate planning goals. Conventional lenders (including Fannie/Freddie) accept revocable living trusts. You remain the trustee, get the mortgage in your personal name, and the trust holds title. Much cleaner than LLC for primary residences. See: Mortgage in a Living Trust California.
LLC Name Privacy in California
California LLCs are public record (filed with the Secretary of State), though using a holding LLC with a neutral name does provide some address privacy. Some investors use a Wyoming LLC as the parent entity for additional privacy, with the Wyoming LLC owning the California LLC that holds title.
Tax Considerations
A single-member LLC is a pass-through entity (disregarded for federal tax purposes), so tax treatment is usually similar to personal ownership. Multi-member LLCs may have different implications. California charges an $800 annual LLC fee minimum. Always consult a CPA and real estate attorney before structuring your purchase.
Frequently Asked Questions — Buying a Home in an LLC California
Can I use a conventional mortgage to buy property in an LLC in California?
No. Fannie Mae, Freddie Mac, FHA, and VA loans require loans to be made to individuals, not LLCs or other business entities. DSCR loans and commercial portfolio loans are the primary options for LLC purchases. DSCR loans are purpose-built for investment property LLC purchases — they lend directly to the LLC, qualify based on rental income rather than personal income, and require no tax returns. This makes them the cleanest path for investors who want their rental properties held in an LLC from day one.
What is the best mortgage for an LLC buying rental property in California?
DSCR loans are purpose-built for LLC rental property purchases. They lend directly to the LLC, qualify based on rental income (not personal income), and require no tax returns. The loan qualifies when the property’s expected rental income covers the mortgage payment — typically measured as a DSCR ratio of 1.0 or above. Down payments typically start at 20% for investment properties. DSCR loans are available up to $3M+ in California and can close in standard mortgage timelines. I work with multiple DSCR lenders and match each investor’s property and LLC structure to the best program.
Can I transfer my California home to an LLC after buying it?
You can, but it triggers the due-on-sale clause in your mortgage. The lender can legally demand full immediate repayment when they discover the transfer. Many lenders don’t enforce it on investment properties in practice, but there’s no guarantee — and you take on that risk without recourse. If you want your property in an LLC, the cleanest approach is to use DSCR financing from the start: borrow in the LLC’s name, close with the LLC holding title, and avoid the due-on-sale risk entirely. Consult a real estate attorney before doing any post-close title transfers.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
