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Investor loans qualified on the rent, not your returns
San Francisco DSCR Loans: Qualify a Rental on Its Rent
A San Francisco DSCR loan qualifies on the rent a property actually collects, and the city has two rental markets that barely touch. New leases rose about 25.7% in a year, to a median of $4,640 for a two-bedroom, while tenants in older buildings pay far less because rent control limits their increases to 1.6% this year. Which of those markets your building is in decides the loan.
Price my rental loan How DSCR loans work
Two Rent Markets and the San Francisco DSCR Loan
Apartment List’s October 2026 report put the median rent at $3,915 for a one-bedroom and $4,640 for a two-bedroom, with overall rents up 25.7% from a year earlier. Zillow’s average listing was $4,808 across all rental types and $6,267 for two-bedrooms on October 19, 2026. Those are the rents a vacant unit can ask. The Census Bureau’s 2020-2024 median gross rent, which counts every occupied unit, was $2,476, because so many tenants hold rent-controlled leases signed years ago.
A debt service coverage ratio loan divides the monthly rent by the full payment of principal, interest, taxes, insurance and HOA dues. At 1.00 they match; most programs want 1.00 or better, price best above about 1.20, and in some cases accept 0.75 to 1.00 with more down or a higher rate. In a building of rent-controlled tenants, that ratio is calculated on in-place rents, not on what the units would list for today.
Running the Ratio on a SoMa Condo
The calculator starts with the SoMa condo median of $802,500 (SF MLS, 12 months ending October 13, 2026), the city’s median one-bedroom rent of $3,915, 25% down and an estimated HOA payment. SoMa’s stock is mostly post-2000 high-rise and mid-rise condos, which keeps the rent outside city rent limits. Replace the figures with the unit you are considering.
DSCR0.62Too low for most programs
- Loan amount
- $601,875
- Principal and interest
- $4,469
- Full payment (PITIA)
- $6,272
- Rent needed for 1.00
- $6,272
- Rent needed for 1.25
- $7,840
Example only. The rate is an illustration built from today’s San Francisco County 30-year par rate plus one point, not a DSCR quote; DSCR pricing depends on the ratio, credit, loan size, prepayment terms and property type. Taxes are estimated at 1.15% of price, insurance at 0.35% and HOA dues at $800 a month.
Expect a ratio below 1.00 at those inputs. HOA dues in full-service buildings weigh heavily, and even after a 25.7% jump in rents, a median-priced condo does not carry a 75% loan. Investors who make the numbers work can put more down, buy lower-priced units, or accept a ratio under 1.00 at a higher rate because they are buying for appreciation. The calculator shows how much down your deal needs to reach 1.00 or 1.20.
Rents, Leases and Fees in San Francisco
Sources: Apartment List San Francisco rent report (October 2026); Zillow rental market trends (October 19, 2026); U.S. Census Bureau ACS 2020-2024; San Francisco Rent Board. Rental vacancy rate not verified.
The spread between a $2,476 Census median and a $4,640 new-lease two-bedroom is the defining fact for an investor here. A building with long-tenured tenants can be priced as if its rents were far higher than they will be for years, and the lender will not make that mistake for you. Ask for the rent roll, lease start dates and the Housing Inventory filings before you make an offer.
Demand looks strong: about six in ten homes are rented, and new-lease rents rose faster than prices over the year.
Where City Investors Find Workable Rentals
SF MLS medians for the 12 months to October 13, 2026.
SoMa, Mission Bay and South Beach
Mostly post-2000 condos at about $802,500, $1.299 million and $1.275 million. Separately sellable condos sit outside city rent limits, though HOA dues can be heavy.
Tenderloin, Downtown and Van Ness
The city’s lowest condo medians, about $519,000 to $690,000, which helps the ratio.
Western Addition
Condos at about $875,000, near the middle of the city and its transit lines.
Richmond District and Inner Mission
Flats, Victorians and small buildings where rent control on older stock is the rule; condos run about $1.25 million to $1.5 million in the Richmond and about $1.068 million in the Inner Mission. Some buildings are held as TICs.
Bayview
Houses near $981,500 and condos near $710,000, the most affordable entry for a single-family rental, which falls under the state cap rather than city rent limits.
Pre-1979 Buildings: The Rent Roll You Inherit
The San Francisco Rent Ordinance, Administrative Code Chapter 37, limits rents in residential units in buildings first certified for occupancy on or before June 13, 1979, which covers most of the city’s multifamily stock. The allowable annual increase for March 1, 2026 through February 28, 2027 is 1.6%, announced January 14, 2026, once every 12 months, and unused increases can be banked. When a unit is vacated, its rent resets to market. For a buyer of a Victorian fourplex or a Richmond building of flats, the rents on the leases at closing are, practically, the rents for as long as those tenants stay. A lender will qualify the building on them.
Condos and Houses: Costa-Hawkins and the 8.8% State Cap
Single-family homes and condos that can be sold separately are exempt from the city’s rent limits under the state Costa-Hawkins Act. They fall under AB 1482 instead, whose cap in this area is 8.8% for August 1, 2026 through July 31, 2027, unless the property qualifies for an AB 1482 exemption, such as a certificate of occupancy within the last 15 years, or individual ownership of a house or condo with the required written notice to the tenant. AB 1482 runs until January 1, 2030. That is why condos and houses are often easier to underwrite as rentals than older apartment buildings.
Just Cause, Owner Move-In and Relocation Costs
Rent limits and eviction rules are separate here. Just-cause eviction rules, with 16 listed causes in section 37.9, apply to most residential units, including post-1979 units since January 2020, so a newer condo can raise rent within the state cap but still cannot be emptied at will. Owner move-in requires at least 25% ownership for owners who bought on or after February 21, 1991. Relocation payments for March 2026 through February 2027 are $8,245 per tenant for no-fault evictions, up to $24,733 per unit, plus $5,497 for each elderly, disabled or minor occupant; Ellis Act withdrawals run $11,110.05 per tenant, up to $33,330.13 per unit. Underwrite as if the tenants stay.
Paperwork an Owner Files Every Year
Every residential owner must file the Housing Inventory with the Rent Board by March 1 each year, and a current filing is needed to enforce rent increases. The 2026 Rent Board fee is $59 per unit.
Short-Term Rentals and TICs
We could not verify the city’s current short-term rental registration and night-cap rules, so plan the loan on long-term rent, which is also the basis most DSCR lenders accept. TIC interests are a separate financing market served by a few local lenders, and we have not verified which, if any, offer investor terms.
San Francisco DSCR Loan Terms in Brief
Purchases usually take 20% to 25% down, more with a ratio under 1.00 or a lower score. Credit floors run around 620 to 660, with better pricing above 700. Lenders commonly want three to six months of payments in reserves. Prepayment penalties are common, often stepping down from 5% in year one to 1% in year five, and usually lower the rate. Most programs let you close in an LLC with personal guarantees, though LLC ownership can affect AB 1482 exemptions, so speak with your attorney about vesting. DSCR is a non-QM product with wide variation between lenders. If you will live in one unit, use an owner-occupied loan such as FHA or conventional instead, and if you already own a city rental with equity, an investment property HELOC can fund the next purchase.
From Rent Roll to Funded Rental Loan
- Send the rent rollCurrent leases with start dates, or expected rent for a vacant condo, plus the year the building was certified.
- Check which rules applyMike flags Rent Ordinance coverage, Costa-Hawkins status and the AB 1482 cap, then runs the ratio.
- Structure the loanDown payment, prepayment terms and LLC vesting, priced across several DSCR lenders.
- Appraisal and rent scheduleA local appraiser values the property and reports market rent.
- CloseE-signature or a mobile notary; an investment loan has no rescission wait.
San Francisco DSCR Loan FAQs
Can a DSCR lender use market rent on a rent-controlled San Francisco building?
Generally not for occupied units. The lender qualifies on the rent the leases actually produce, and in buildings certified on or before June 13, 1979, existing tenants’ increases are limited to 1.6% for March 2026 through February 2027. Vacant units reset to market. Expect the ratio to be calculated on today’s rent roll, not future rents.
Is a San Francisco condo I buy as a rental under rent control?
Not under the city’s rent limits if it can be sold separately; Costa-Hawkins exempts it. The state AB 1482 cap of 8.8% for August 2026 through July 2027 may apply unless the condo qualifies for an exemption. City just-cause eviction rules still apply to most units, including those built after 1979.
What relocation payments might a San Francisco landlord owe?
For March 2026 through February 2027, no-fault evictions require $8,245 per tenant, up to $24,733 per unit, plus $5,497 for each elderly, disabled or minor occupant. Ellis Act withdrawals require $11,110.05 per tenant, up to $33,330.13 per unit. The Rent Board sets these amounts for each March-to-February year.
Do San Francisco landlords have to register their units?
Yes. Every residential owner must file the Housing Inventory with the Rent Board by March 1 each year, and a current filing is required to enforce rent increases. The 2026 Rent Board fee is $59 per unit. Ask a seller for the building’s filing history during your due diligence period.
What ratio will a San Francisco DSCR loan need?
A ratio of 1.00 is the common minimum, and about 1.20 or higher usually gets the best pricing. A few programs go as low as 0.75 if you add down payment or accept a higher rate. At the SoMa condo median and the city’s median one-bedroom rent, a buyer at those figures needs well over 25% down, or a lower-priced unit, to reach 1.00.
Can an LLC hold a rental bought with a San Francisco DSCR loan?
Most programs allow it, with members signing personal guarantees. Owning through certain LLCs can affect whether a house or condo keeps its AB 1482 exemption, so review vesting with your attorney before escrow opens.
Can I use Airbnb income to qualify?
We have not verified the city’s current short-term rental rules, and lender policies on nightly income vary. Most DSCR lenders accept long-term market rent, so size the loan on a standard lease and treat any short-term income as upside.
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Price a San Francisco DSCR Loan on Your Rent Roll
Send the address or price, the current rent roll or expected rent, the year the building was certified for occupancy and whether it is a condo, house or multi-unit building. Mike will check the ratio and price DSCR options across multiple lenders.
Prefer to talk? Call 800-801-5626.