LAMD-D08 DSCR Standard (No Minimum DSCR) | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 640
Max LTV – purchase: 85% (720, ≤$1.5M)
Max LTV – rate/term refinance: 85% (720, ≤$1.5M)
Max LTV – cash-out refinance: 80% (720/700, ≤$1M)
Minimum loan amount: $100K
Maximum loan amount: $4.0M (720 FICO, purchase/rate-term only, max 60% LTV above $3.5M); cash-out max $3.5M (720/700 FICO, 55% LTV)
Cash-out (cash in hand) limit: Unlimited.
LTV reductions & overlays: Investment property types: condo 85% purchase / 80% cash-out; non-warrantable condo 80% / 75%; condotel 75% / 70% (max $2M); 2–4 units 80% / 75%; modular 75% cash-out; rural 80% / 75%. Housing: 0x60x12 −5%; 0x90x12 not allowed. Foreclosure/short sale/DIL: 36 months standard, 24 months −5%, 12 months −15% and no cash-out. Bankruptcy: 24 months −5%, 12 months −5% and no cash-out. DSCR 0.75–0.999: −5%, 680 FICO, cash-out 70%. DSCR under 0.75: −5% at 700 FICO or −10% at 680, refi max $2M, cash-out 70%. Interest-only max 80%. Unleased/vacant refinance −5%. STR −5%. Reduced reserves −5% (3 months fewer). No-reserve rate/term refinance max 65%. Foreign national −5% ($1.5M, 660). Declining market −5%. Cash-out within 6 months of purchase −5%.

DSCR requirements

Minimum DSCR: None – DSCR <0.75 allowed with LTV cuts
DSCR below 1.00: Yes – 0.75–0.999: −5% LTV, 680 FICO, CO max 70%
No-ratio (no DSCR calculated): DSCR 0–0.749: −5% LTV with 700 FICO or −10% with 680; max $3M, refi max $2M, CO 70%; 2-4 units in IL/NY ineligible
How DSCR and qualifying rent are calculated: Gross rent ÷ PITIA at note rate (IO uses the initial IO payment). Unleased purchase uses the 1007. Leased: lower of lease or market; a higher lease with 3 months' receipts; a higher market rent up to 120% of the lease (lease $1,400, market $1,800 → $1,680). DSCR can go below 0.75 at reduced LTVs.

Products & terms

Products: 15/30/40 fixed, 30/40 IO, 5/6 & 7/6 SOFR ARM
Interest-only: Yes – max 80%; 10-yr IO on 30/40-yr fixed and 5/6, 7/6 ARM
Prepayment penalty: Optional on business-purpose loans. Terms 1–5 years; structures: flat 5% or 3%, standard 6 months' interest on prepayment over 20%, or step-down (e.g., 5-4-3-2-1). Not offered in AK, DC, KS, MD, NM; IL not over 8% APR; NJ not over 6% rate; MI 1% with 1–3 year term; MN 1% with 1–3 year term on loans within conforming limits; NC 2% with 1–3 year term on loans of $100K or less; OH 1% on 1–2 units and none under $116,356; PA none on 1–2 units under $329,411; RI 2% 1-year on purchases; MS step-down only; WA and WI not on ARMs.
Reserves: 6 mo (<=$1M); 9 mo ($1-2M); 12 mo (>$2M). Reduced reserves: 3 months fewer with a 5% LTV reduction. No reserves required on rate/term refinances at 65% LTV or less. Cash-out proceeds may count toward reserves; gift funds may not. IO loans use the IO payment. First-time homebuyer as first-time investor: 12 months.

Borrower & credit

Housing payment history: 12-month history required on the primary residence (and on the subject for refinances); up to 1x30x12 at full LTV; 0x60x12 −5%; 0x90x12 not allowed. Lates must be cured by application. Under 12 months' primary history can be covered by 12 months on another owned property. Not required for professional investors or foreign nationals.
Credit events (BK, foreclosure, short sale, modification): Foreclosure, short sale, deed-in-lieu and bankruptcy allowed as soon as 12 months after (with LTV cuts and no cash-out); 24 months −5%; 36 months standard. No multiple events within 7 years. Bankruptcies must be settled by application.
Forbearance, deferrals & modifications: Forbearance with all payments made: reinstated, no waiting period. Missed payments: reinstated plus 3 on-time payments after forbearance (missed payments may have been added to the balance). Borrower explains the hardship.
Collections, charge-offs, judgments & liens: Collections/charge-offs under 24 months may stay open up to $2,000 total; 24+ months up to $2,500 each; all medical and time-barred collections can stay. Judgments, garnishments and liens must be paid. Tax liens not affecting title may stay with title sign-off, a repayment plan with 6 on-time payments, and (refinances) a subordination. Credit counseling OK after 12 months.
Tradelines & credit depth: 3 tradelines reporting 12+ months or 2 reporting 24+ months, all with activity in the last 12 months (3 credit scores satisfies it); authorized-user, collection, charge-off and deferred accounts don't count. Limited-credit option not available on investment properties.
First-time homebuyer: Yes – as first-time investor FTHB: 75%, 700 FICO, DSCR 1.00, 12 mo reserves, $1.5M, 12 mo housing history
First-time investor: Allowed (hasn't owned an investment property 12 months within 36): 660 FICO, $1.5M, 6-month primary mortgage history (spouse's or free-and-clear profile OK), no gifts. First-time homebuyers can also qualify: 75%, 700 FICO, DSCR 1.00, 12 months' reserves, $1.5M, 12-month housing history (not foreign nationals).
Foreign national: DSCR only: −5% LTV, max $1.5M, 660 FICO or grid, DSCR 1.00. SFR, 2–4 units and warrantable condos only; no rural; max 2 acres; no gifts or POA. Passport plus visa/I-797 (Visa Waiver countries exempt).
ITIN borrower: No – all borrowers other than foreign nationals must have a valid Social Security Number. A borrower who lives and works abroad can qualify under the foreign national rules with or without an ITIN.
Non-permanent resident: Yes – with US credit and a valid SSN. Eligible visas: E-1, E-2, E-3, EB-5, G-1 to G-5, H-1, L-1, NATO, O-1, R-1, TN. Visa must be current (if expiring within 6 months, show the extension is in process); EAD when required.
LLC / entity vesting: LLC, partnership or corporation vesting allowed on business-purpose investment loans. Max 4 individual members/partners/shareholders (no entities or trusts as members); everyone with over 25% ownership must apply and meet credit; LLC can be the applicant with a personal guaranty, partnerships/corporations vest only (loan in individual names). Formation documents, EIN and good standing required. Inter vivos revocable trusts allowed; blind trusts case-by-case.
Gift funds & assets: Allowed toward down payment, closing costs and debt payoff (not for reserves; not for first-time investors or foreign nationals). Gifts of equity not allowed on investment properties.
Financed property / exposure limits: No limit on financed investment properties; lender exposure $7.5M or 10 properties per borrower; condo project exposure the lesser of $5M or 15%.
Other borrower rules: All borrowers (other than foreign nationals) need a valid SSN. Qualifying score is the highest representative score of all borrowers; co-borrowers need at least 500. Investment/business purpose only. Experienced investor = owned and managed investment property 12 months within the last 36 (first-time investors under separate rules). Professional investors (own 5+ properties, 5 years credit depth, 3+ mortgages reported in the last 3 years with no lates) skip non-subject mortgage histories and the housing history. Irrevocable trusts, land trusts and borrowers with diplomatic immunity are ineligible.

Property

Eligible property types: SFR, condo, townhouse, PUD, modular, non-warrantable condo, condotel, rowhouse, 2-4, rural
ADUs & unpermitted additions: ADU rent can count when the appraisal shows zoning compliance is legal – permits are NOT required to establish that – with at least 2 sales comps that have an ADU and 1 rent comp with an income-producing ADU. Case-by-case: a 1-unit with up to 3 ADUs, a 2-unit with up to 2, a 3-unit with 1; no ADUs on 4-units. Purchase: lesser of 1007 or lease; refinance: 1007 market rent plus the current lease and 2 months' receipts. Multiple dwellings on one lot are ineligible other than legal ADUs.
Non-warrantable condo: Non-warrantable condos allowed with ONE non-warrantable factor: commercial space under 50% (subject unit fully residential), new projects 50% sold with common areas complete, HOA delinquencies up to 20%, developer control with defined turnover, reserves at least 5%, investor concentration up to 60% (higher with a rental history), single-entity ownership up to 50%, non-structural litigation case-by-case. Ineligible: timeshares/occupancy restrictions, live/work, manufactured projects, conversions under 2 years, over 50% non-residential, common-interest apartments, safety litigation. Borrower limited to 2 units (5–20 unit projects) or 10% of larger projects.
Condotel: Allowed as non-warrantable: full-size kitchen (fridge, stove, oven), a bedroom (no studios), 500+ sq ft, investor concentration up to 100%. Ineligible: 'hotel' or 'motel' in the name, converted hotels/motels, projects under 10 units, or locations outside a resort/destination area (beach, ski, lake).
Rural / acreage: Rural allowed: 80% purch/RT, 75% CO; max 20 acres (over 20 case-by-case with similar-size comps). Not available to foreign nationals.
Minimum square footage: 600 sq ft for single-unit properties (including condos); 2+ units no minimum (size must be supported by market comparables); condotels minimum 500 sq ft
Mixed use: No – residential 1–4 units only (SFR, PUD, townhouse, rowhouse, modular, condo, 2–4 units). Condo projects over 50% non-residential are ineligible; the subject condo unit must be 100% residential.
5+ units / multi-property: No
Ineligible properties: Agricultural zoning (case-by-case), co-ops, Hawaii lava zones 1–2, hobby farms/income-producing acreage, houseboats, manufactured/mobile homes, multiple dwellings on one lot (legal ADUs OK), oil/gas leases (case-by-case), unique properties, working farms/ranches/orchards, room-and-board, assisted living. Appraisal condition C5/C6 or quality Q6 ineligible unless corrected before funding. Single-unit minimum 600 sq ft; year-round use with permanent heat; deferred maintenance under $2,000; no health or safety issues; over 20 acres case-by-case.
Declining markets: 5% reduction to the maximum LTV.
Appraisal, review & insurance: Up to $2M: one appraisal plus an AVM with 90%+ confidence within 10% (or a CU score of 2.5 or less on 1-unit properties with loan amounts under the CU county limit); desk review/CDA if AVM confidence is under 90% or CU is over 2.5; field review if variance is over 10% (second appraisal if the field review is more than 5% low, lower value used). Over $2M: two appraisals, lower value used. Appraisals good for 120 days (recertification extends to 365). 1-unit appraisals need a 1007. Holdbacks case-by-case for cosmetic/weather items only (150% of bid, max the lesser of $10K or 10% of value, completed within 14 days with 1004D).

Rental income

Rent used on a purchase: Market rent (unleased OK)
Rent used on a refinance: Lower of lease or 1007; higher lease with 3 mo receipts; market up to 120% of lease
Vacant / unleased refinance: Allowed with a 5% LTV reduction – single-unit vacant refinances (rate/term or cash-out) use the 1007 market rent. 2–3 units may have 1 vacant unit; 4-units up to 2 with DSCR 1.00+ (1 if DSCR is under 1.00); vacant units use market rent.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Nightly-rate rentals in an established STR market (confirmed by appraisal; not where local rules restrict STRs). Purchase: 1007 or AMC STR analysis (AirDNA data allowed). Refinance: 12-month average including zero months (or 12 monthly/annual platform statements); without 12 months of documentation the property is treated as unleased. Gross rents reduced 20%.
Short-term rental limits: 5% LTV reduction and 20% rent haircut.

Refinance seasoning

Cash-out seasoning: Rate/term: no seasoning. Cash-out: after 6 months uses current value; under 6 months −5% and value is the lower of appraisal or price plus improvements. Previously listed properties must be off market 1 month before application (DSCR with a prepay: no seasoning).
Delayed financing (cash purchase recoup): Yes – per FNMA
Recently listed for sale: Must be off the market by application; cash-out needs 1 month since delisting unless the DSCR loan carries a prepayment penalty.

Other terms

Seller / interested-party concessions: Interested-party contributions up to 6% of the lower of price or value on investment properties, for closing costs/points only.
Secondary financing: Allowed with CLTV at the max LTV (HELOCs counted at the full line); the second-lien payment is included in DSCR. No seller-held seconds or negative amortization. A second closing concurrently through a companion closed-end second must meet both programs' rules.
State & local restrictions: All states, except loans failing the NY subprime test; 2–4 unit DSCR under 0.75 not eligible in IL or NY. Florida foreign-national purchases subject to SB 264 restrictions (China, Russia, Iran, North Korea, Cuba, Venezuela, Syria).

Additional details

Notes: Grid DSCR >=1 (purch-RT/CO): <=$1M 720 85/80, 700 80/80, 680 80/75, 660 75/75, 640 75/70; $1-1.5M 720 85/75, 700 80/75, 680 80/75, 660 75/70, 640 65/65; $1.5-2M 720 75/70, 700 75/70, 680 70/65, 660 70/65, 640 65 purchase/RT only (no cash-out); $2-2.5M 720/700/680/660 70/65; $2.5-3M 720/700 70/65, 680 65/60; $3-3.5M 720/700 70/55; $3.5-4M 720 60 purchase/RT only. Condo 85/80; 2-4 & rural 80/75; modular CO 75. STR -5%. Seller concessions 6%. Experienced investor = 12 mo of last 36. Housing history required (not required for professional investors or foreign nationals).

← LAMD-D07 · All programs · LAMD-D09 →