Refinance Your Airbnb Property in Sacramento NOW

The Airbnb Exit Strategy: How to Refinance Your Investment Property After Stopping Short-Term Rentals

SACRAMENTO, CA – AUGUST 9, 2025: As a real estate investor, you’ve mastered the art of maximizing returns. Perhaps you’ve spent years profiting from the lucrative short-term rental market, turning your property into a cash-flow machine via platforms like Airbnb. But now, due to shifting regulations, market saturation, or a desire for more predictable, passive income, you’re ready to transition to a long-term rental strategy.

This strategic pivot is smart, but it presents a unique financing challenge. Traditional banks rely on W-2 income and tax returns for loan approval, and a property that was an Airbnb often lacks the verifiable, long-term rental history they require. This is where a specialized financing solution becomes not just an option, but a necessity.

This comprehensive guide is meticulously designed for investors like you, operating in dynamic markets such as Sacramento, California, who need to refinance an investment property after stopping Airbnb. We’ll explore the specific loan product that solves this problem, detail the current market conditions you need to know, and show you why a flexible lender is your most valuable partner in this transition.

Refinance Your Investment Property:

The Challenge with Traditional Financing: Why Banks Say “No”

When you apply for a traditional refinance, a conventional lender will look at your personal income and the property’s rental history to determine its viability. For a property that was previously a short-term rental, this process hits a roadblock.

• Lack of Verifiable Income: Airbnb income can be inconsistent and is often classified differently from long-term rental income. Lenders struggle to underwrite a loan based on a property’s “potential” long-term rent, especially if there are no existing leases.
• Income Documentation Issues: Even with a new lease in place, a traditional lender will often require you to show months or even a full year of consistent rental income, which you simply won’t have.
• W-2 Income Requirements: If you are a full-time investor, you may not have the W-2 income to satisfy a bank’s debt-to-income (DTI) ratio requirements, regardless of your personal wealth.

These hurdles can lead to application denials or significant delays, costing you valuable time and money. The solution is to work with a lender that underwrites based on the property’s merits, not your personal tax returns.

The Investor’s Solution: DSCR Loans for a Seamless Transition

The Debt Service Coverage Ratio (DSCR) Loan is the ideal solution for refinancing a property after stopping short-term rentals. Unlike conventional loans, a DSCR loan bypasses your personal income and employment history entirely. The underwriting is based on one simple, powerful metric: the property’s ability to generate enough income to cover its mortgage payments.

The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

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Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

Page 2 of 5

How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

Page 3 of 5

What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

Page 5 of 5

Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

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Understanding the DSCR Calculation

The DSCR is a simple formula:

DSCR=TotalDebtServiceNetOperatingIncome(NOI)​

• Net Operating Income (NOI): This is the property’s potential rental income (determined by a professional appraisal) minus its operating expenses (e.g., property taxes, insurance, HOA fees). For a property that was a short-term rental, the lender will use a market rent appraisal to determine the long-term rental potential, even without a tenant in place.
• Total Debt Service: This includes the principal, interest, taxes, and insurance (PITI) of the new mortgage.

A DSCR of 1.0 means the property’s income exactly covers its expenses. A DSCR of 1.25, for example, means the property generates 25% more income than is needed to cover its debt. Most lenders, including GHC Funding, look for a DSCR of 1.0 or higher.

Ultimate Rental Property Loan Quiz

Navigating the world of real estate investment can be complex, especially when it comes to financing. Securing a loan for a rental property is a critical step for any aspiring landlord. This quiz is designed to test your knowledge on this important topic and help you understand the key factors involved in the process.

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Page 1 of 5

For a first-time real estate investor, what is a common hurdle when trying to secure financing? A) Lenders offer lower interest rates for a first loan for a rental property. B) There are no documentation requirements for a first loan for a rental property. C) A higher down payment is often required for a loan for a rental property. D) The approval process for a loan for a rental property is typically faster for new investors.

Page 2 of 5

Which factor is most heavily scrutinized by lenders when evaluating a borrower's application for investment property financing? A) The borrower's debt-to-income (DTI) ratio before the new loan for a rental property. B) The number of rooms in the property being considered for the loan for a rental property. C) The color of the property when applying for the loan for a rental property. D) The borrower's political affiliation when seeking a loan for a rental property.

Page 3 of 5

What is a significant benefit of using a cash-out refinance on your primary residence to purchase an investment property? A) It provides the funds for a down payment, but you'll still need a separate loan for a rental property for the remaining balance. B) Using a cash-out refinance means you can avoid the appraisal process that is standard with a loan for a rental property. C) The interest rate on a cash-out refinance is always higher than the rate for a traditional loan for a rental property. D) A cash-out refinance has no closing costs, unlike a standard loan for a rental property.

Page 4 of 5

What is the main purpose of getting a pre-approval letter from a lender before you start looking for investment properties? A) A pre-approval letter is a binding contract that forces the bank to give you a loan for a rental property. B) Getting pre-approved demonstrates to sellers that you are a serious buyer who is financially qualified to obtain a loan for a rental property. C) A pre-approval letter locks in your interest rate for a loan for a rental property for one year. D) You are required by law to have a pre-approval letter before you can make an offer on any home that needs a loan for a rental property.

Page 5 of 5

For an investor planning to buy, renovate, and quickly sell a property (a "fix and flip"), what type of financing is most suitable? A) A 30-year fixed-rate mortgage is the best loan for a rental property in this scenario. B) A short-term bridge or hard money loan, as this type of loan for a rental property is designed for quick turnarounds. C) A reverse mortgage is the standard type of loan for a rental property used by flippers. D) A government-backed FHA loan for a rental property is ideal for short-term investment projects.

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Current Market Insights for DSCR Loans (as of August 9, 2025)

For real estate investors, staying informed on current market conditions is paramount. Here are the rates and requirements you can expect for a DSCR loan today:

• Interest Rates: DSCR loan rates are generally higher than traditional conventional rates, reflecting the higher risk profile for lenders. As of today, DSCR loan rates for a well-qualified investor are typically in the range of 6.5% to 8.0%. These rates can be influenced by several factors:
  • Loan-to-Value (LTV): Lower LTV (higher down payment or more equity) leads to lower rates.
  • Credit Score: A credit score of 720+ will secure the most favorable rates. Scores between 640 and 700 are often accepted, but with higher rates.
  • Property Type: Single-family homes typically receive the most competitive rates, while multi-family (2-4 units) and mixed-use properties may carry a slight premium.
  • DSCR Ratio: A higher DSCR (e.g., 1.25+) often qualifies for a lower interest rate.
• Typical Requirements:
  • No Personal Income Verification: The number one benefit. Lenders do not require pay stubs, W-2s, or personal tax returns.
  • Entity Ownership: The property must be held in a legal entity such as an LLC, S-Corp, or C-Corp. This is a standard requirement for DSCR loans and helps separate your personal finances from your business.
  • Minimum Credit Score: Generally, a minimum credit score of 640 is required, though some lenders are more flexible.
  • Loan-to-Value (LTV): LTVs typically range from 75% to 80%, meaning you need a minimum of 20% to 25% equity in the property.

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

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Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

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Geo-Targeting Your Investment: Sacramento, California

Sacramento’s real estate market is a prime example of where the ‘refinance after stopping Airbnb’ strategy is particularly effective. With its robust economy, consistent job growth, and an influx of residents from the pricier Bay Area, Sacramento’s long-term rental market is strong and stable.

• High-Demand Neighborhoods: Focus your strategy on areas with strong rental demand.
  • Midtown (Zip Code 95814): Known for its vibrant lifestyle, walkability, and proximity to state government jobs, Midtown is a perfect place to convert a former Airbnb into a long-term rental for young professionals and state employees.
  • East Sacramento (Zip Code 95819): A more established, family-friendly neighborhood with high-quality schools and proximity to the UC Davis Medical Center. Converting a property here can attract long-term tenants seeking a stable community.
  • Oak Park (Zip Code 95817): This area has seen significant revitalization and is attracting a diverse group of tenants, from students to young families, making it a great location for a DSCR refinance.
• Economic Drivers: Sacramento’s economy is powered by the state government, a burgeoning tech sector, and the expanding presence of UC Davis Health. These stable employers drive consistent demand for long-term rentals, making your investment a low-risk proposition for a DSCR lender.

To gain deeper insights into the local market, consider these authoritative resources:

• Sacramento County Assessor’s Office: An essential resource for understanding property taxes and assessed values: assessor.saccounty.gov
• California Association of REALTORS® (C.A.R.): Provides invaluable market data and economic forecasts: www.car.org
• Sacramento Association of REALTORS® (SAR): Offers local market reports and networking opportunities: sacrealtor.org
• Sacramento Real Estate Investment Association (SacREIA): A great way to connect with local investors and learn from their experiences: www.meetup.com/SacREIA/

Quiz on California Rental Property Regulations

This quiz is designed to test your knowledge of the unique laws and regulations that govern owning and managing a California rental property. By understanding these key concepts, you can protect your investment and ensure compliance with state and local laws. Good luck!

Page 1 of 5

What is a key difference between rent control in California and in other states? A) Most rent control ordinances in California only apply to properties built before a certain date, whereas other states may have blanket policies. This is a crucial consideration for any California rental property. B) California has no statewide rent control laws, only local ordinances. C) Rent control in California is always based on the landlord's income, not the property's location. D) California law allows landlords to raise the rent as much as they want, as long as they provide 30 days' notice.

Page 2 of 5

Which of the following is a mandatory disclosure for a landlord of a California rental property? A) The landlord's personal social security number. B) Information about any known bed bug infestations in the unit or on the property. This is a specific and mandatory disclosure required for a California rental property. C) The property's original purchase price. D) A copy of the landlord's last tax return.

Page 3 of 5

Under what circumstances can a landlord in California increase the security deposit for a current tenant? A) A landlord can increase the security deposit at any time, for any reason. B) A landlord cannot increase a security deposit once the tenancy begins unless the original amount was less than the legal limit, a situation that can apply to a California rental property. C) The security deposit can be increased every six months, regardless of the tenant's history. D) The security deposit can only be increased if the tenant signs a new lease.

Page 4 of 5

What is the legal requirement for returning a security deposit for a California rental property? A) The landlord has 45 days to return the deposit after the tenant moves out. B) The landlord must return the deposit within 21 days after the tenant vacates, along with an itemized statement if any deductions were made. This is a critical legal deadline for a California rental property. C) The landlord can keep the deposit indefinitely if they find any damage to the property. D) The deposit must be returned only if the landlord finds a new tenant.

Page 5 of 5

Which law primarily governs the rent caps and 'just cause' eviction requirements for many a California rental property? A) The Costa-Hawkins Rental Housing Act. B) The Ellis Act. C) The Tenant Protection Act of 2019 (AB 1482), which established statewide rent caps and just cause eviction rules, significantly impacting how landlords manage their California rental property. D) The Fair Housing Act.

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Why GHC Funding is Your Go-To Lender for This Transition

Navigating the unique challenges of refinancing a former Airbnb property requires a lender with a deep understanding of investor needs. This is where GHC Funding stands apart.

GHC Funding specializes in investor-centric financing solutions like the DSCR loan, and we understand the nuances of transitioning from short-term to long-term rentals. Our streamlined underwriting process focuses on the asset’s performance, not your personal finances.

Our team has an in-depth understanding of the Sacramento market and can help you structure a loan that maximizes your cash flow and meets your long-term investment goals. Beyond DSCR loans, we offer a full suite of financing options for investors, including SBA 7a loans, SBA 504 Loans, Bridge Loans, and various alternative real estate financing products, ensuring we can be a long-term partner in your portfolio’s growth.

Our flexible underwriting, competitive rates, and commitment to a fast, efficient closing process mean you can make this strategic shift without unnecessary delays or stress.

California Investment IQ!

Think you know California? From its golden beaches to its towering redwoods and booming tech hubs, the Golden State offers a unique landscape for real estate investors. Whether you're a seasoned pro or just starting your journey with no income verification rental property loans for new investors, understanding the state you're investing in is key.

Put your knowledge to the test with our quick quiz about California!

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Page 1 of 7

1. What is the official nickname of California, often referencing its rich history and natural resources? A) The Sunshine State B) The Golden State C) The Evergreen State D) The Silver State

Page 2 of 7

2. Which major California city is famously known as the "Tech Capital" of Silicon Valley and is a hub for innovation? A) Los Angeles B) San Francisco C) San Jose D) San Diego

Page 3 of 7

3. What natural disaster is California prone to due to its location on major tectonic plate boundaries? A) Hurricanes B) Tornadoes C) Earthquakes D) Blizzards

Page 4 of 7

4. Which iconic bridge spans the Golden Gate Strait in San Francisco, serving as a famous landmark? A) Brooklyn Bridge B) Tower Bridge C) Golden Gate Bridge D) Mackinac Bridge

Page 5 of 7

5. California's diverse economy includes major industries such as technology, entertainment, agriculture, and what other significant sector, often driving demand for rental housing? A) Coal Mining B) Automobile Manufacturing C) Tourism D) Fishing

Page 6 of 7

6. What is the capital city of California? A) Los Angeles B) San Francisco C) Sacramento D) San Diego

Page 7 of 7

7. Which of these popular national parks is NOT located in California? A) Yosemite National Park B) Yellowstone National Park C) Sequoia National Park D) Death Valley National Park

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FAQs: Refinancing After Stopping Airbnb

Ready to Make Your Move?

The decision to shift from short-term to long-term rentals is a powerful step toward building a more stable, passive income stream. Don’t let the complexities of traditional financing hold you back.

Refinancing an investment property after stopping Airbnb is not just possible—it’s a smart, strategic play with the right partner.

Explore the financing solutions available to you today. Visit us at www.ghcfunding.com to learn more about our DSCR Loans, SBA 7a loans, and other alternative financing options. Or, for a direct conversation about your specific investment property in Sacramento, call us at 833-572-4327.

Ready to Make Your Move?

GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

At GHC Funding, we are commercial finance specialists who guide real estate investors and business owners through the world of alternative lending. Our primary focus is on securing the right capital for your specific goals, whether that's a cash-flow-based DSCR loan for your rental portfolio, an SBA loan to grow your company, or a bridge loan to close a deal quickly and efficiently.

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