The rent the lender will count
There is no agency rule for a DSCR loan: Fannie Mae's rental income policy belongs to agency loans, and a DSCR loan is a non-agency, business-purpose product. Each DSCR lender writes its own rule for what rent it counts on a vacation rental, from the home's own short-term history, from the appraiser's long-term market rent, or not at all for nightly income. Your loan officer asks the lender which method it uses before the file is built, because the answer decides whether the home's income covers its payment.
The business-purpose line
A DSCR loan is credit for a business purpose on a rental you do not occupy, which places it outside Regulation Z and the ability-to-repay rule that makes a lender verify your income on a loan for your own home. Regulation Z's official interpretation says a home the owner expects to occupy for more than a number of days it sets in the coming year cannot be treated as non-owner-occupied, and gives a beach house the owner stays in for part of a summer and rents out the rest of the year as its example. A vacation home you will also use is therefore a different question for the lender. Occupancy is sworn in writing, and a DSCR loan on a home you intend to live in is mortgage fraud.
The City of San Luis Obispo and Paso Robles
The City of San Luis Obispo's zoning code lists vacation rentals among the uses prohibited in all zones; a homestay, in the owner-occupied dwelling only, is a separate use with its own permit and business license, and a new owner has to apply again within the City's deadline. An ADU there cannot be rented for less than the City's minimum term or used as a homestay. So in the city the rent a DSCR lender reads comes from tenancies, never from a nightly rate. In Paso Robles the City's short-term rental chapter has the owner agree that short-term rental use ends when the property is sold, except in the City's T zoning districts, and lets the council cap permits and keep a waiting list; outside the T zones the seller's permit does not come with the house.
The County's coast: Cambria, Avila Beach, Cayucos and Los Osos
In the unincorporated county a vacation rental is governed by the County's coastal ordinance on the coast and its inland ordinance elsewhere. On the coast it needs a zoning clearance, a business license and transient occupancy tax registration; where water or sewer comes from a community system, the application shows the provider has confirmed capacity. In Cambria, Cayucos and Avila Beach the clearance is available when the home meets the ordinance's spacing standard between rentals, which a Minor Use Permit can modify; other coastal communities need a Minor Use Permit, and in Los Osos the County caps the number of rentals, limits a person or entity to one, and voids the permit when the property changes hands. The County's business license for a vacation rental cannot be transferred to a new owner: a buyer who applies before the old license lapses can get a new one with a new zoning clearance, and after it lapses the home has to qualify as a new vacation rental, spacing standard included. Every lodging business in the unincorporated area, a private home included, holds a County business license and collects the transient occupancy tax and the tourism assessments, whether it is rented directly, through a manager or on a listing site.
Morro Bay and Pismo Beach
In Morro Bay a short-term rental needs the City's permit, a business license and a transient occupancy tax account before it operates, and the permit renews with periodic inspections. Full-home rentals in residential zones are capped, with a waiting list over the cap, and a new rental keeps a set distance from another permitted one; home-shares and rentals in commercial and mixed-use zones sit outside the cap and the distance rule, and the City's guide says an ADU may be rented long term but not as a short stay. The City's page does not say whether a permit transfers on sale, so ask the City before you count on one. In Pismo Beach the City has stopped issuing new short-term rental licenses, a permit does not transfer with a sale, and vacation rentals are allowed only in certain zones of the downtown core; the Coastal Commission's approval of the City's updated land use plan carries a modification on short-term rentals that is not in force until the City Council accepts it.
