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. Call (800) 239-1103.
California commercial real estate investors increasingly choose DSCR loans over traditional bank commercial loans — but the right choice depends on your specific situation. Here’s the full comparison. See also: Commercial Loans CA | DSCR Loans CA.
Side-by-Side Comparison
| Feature | DSCR Loan | Traditional Commercial |
|---|---|---|
| Income verification | Property cash flow only | Personal tax returns required |
| DTI calculation | Not used | Personal DTI evaluated |
| Properties owned limit | None | Often 10 or fewer |
| Closing speed | 14–21 days | 30–60 days |
| Rate | 7.49%–10.49% | 7.00%–9.99% |
| Balloon payment | 5–10 yr typical | 5–10 yr typical |
| Max LTV | 75% | 75–80% |
| Best for | Portfolio investors, self-employed | W-2 borrowers, owner-occupied |
When Traditional Commercial Beats DSCR
Traditional bank loans are worth the extra documentation when: you’re buying owner-occupied commercial property (SBA or bank often better than DSCR), you need higher leverage (80% LTV), your personal income is strong and clean enough to qualify easily, or your banking relationship provides covenant flexibility that matters to your long-term business relationship. For W-2 borrowers with straightforward income, the documentation burden of traditional commercial lending is manageable and the rate advantage is real.
When DSCR Is the Better Choice
DSCR loans are the right tool for investors with complex tax returns (significant write-offs, self-employment income, K-1s), portfolio investors with 5+ properties where personal DTI is maxed, investors buying in multiple markets simultaneously, those who need to close in 14–21 days for a competitive acquisition, or where property cash flow is strong but personal income documentation would be burdensome. I’ve used DSCR loans to fund deals for California investors who couldn’t qualify conventionally on paper but had properties with excellent cash flow — the property qualifies itself.
The Practical Decision
My recommendation: start with DSCR for investment properties unless you have a compelling reason to go traditional. The speed, flexibility, and no-income-documentation advantage is worth a modest rate premium for most California investors. For owner-occupied commercial — a business that operates out of the building — traditional or SBA financing usually wins on rate and structure. Tell me your deal and I’ll run both scenarios.
Get a Commercial Loan Quote
I’ll run both DSCR and traditional scenarios for your deal and show you which makes more sense on paper.
Frequently Asked Questions
What is a DSCR loan and how does it differ from a traditional commercial loan in California?
A DSCR (debt service coverage ratio) loan qualifies based on property cash flow only — no personal tax returns, no personal DTI calculation. The lender divides the property’s net operating income (NOI) by the annual debt service; if the ratio is 1.20x or higher, the loan qualifies. A traditional commercial loan qualifies based on both property income and the borrower’s personal income, tax returns, and debt-to-income ratio. DSCR loans close in 14–21 days vs. 30–60 days for traditional commercial. DSCR rates run slightly higher (7.49–10.49% vs. 7.00–9.99%), but for California investors with complex tax situations or large portfolios, DSCR is often the only practical path to financing additional investment properties.
Can I use a DSCR loan for a commercial property in California?
DSCR loans are most commonly available for 1–4 unit residential investment properties and small multifamily (5–20 units) in California. For larger commercial properties — retail, office, industrial, larger multifamily — the product is typically called a “commercial bridge” or “commercial portfolio loan” that uses a similar property-cash-flow-first underwriting approach, but is structured differently. The key feature across all these programs is the same: the property qualifies based on its income, not yours. I work with lenders across all these asset classes and can structure the right product for your specific commercial property.
How many investment properties can I finance with DSCR loans in California?
There is no limit on the number of properties you can finance with DSCR loans — this is one of their primary advantages over conventional investment property financing. Fannie Mae and Freddie Mac conventional investment loans cap at 10 financed properties. DSCR lenders don’t count your existing properties against you in the same way; each deal is evaluated on its own cash flow merits. California investors with 20, 30, or more properties regularly use DSCR loans to continue scaling. The constraint isn’t property count — it’s finding deals with sufficient DSCR (1.20x+ typically) and coming in with the required down payment (typically 20–25% for investment DSCR loans).
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
