LAMD-D10 DSCR Standard 0.75+ | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 80% (680+, ≤$1.5M; 740 ≤$2M)
Max LTV – rate/term refinance: 80%
Max LTV – cash-out refinance: 75% (720/700, ≤$1.5M)
Minimum loan amount: $100K
Maximum loan amount: $2.5M
Cash-out (cash in hand) limit: Unlimited at 65% LTV or less; $750K cap above 65%.
LTV reductions & overlays: 1x30x12 housing: 75%. First-time investor: 75% (680 FICO, DSCR 1.00+, 12 months' reserves, 0x30x12). Non-warrantable attached condo: 75%. Short-term rental (1 unit only): 75% purchase/rate-term, 70% cash-out, DSCR 1.00+. Interest-only: 75% at DSCR 1.00+ or 70% at 0.75–0.99 (700 FICO). Cash-out $1M–$1.5M with DSCR under 0.80: 65%. Recently listed cash-out: −5%. Declining market: −5%.

DSCR requirements

Minimum DSCR: 0.75
DSCR below 1.00: Yes – 0.75–0.99: 75% purch/RT (720), 70% CO; CO 65% for $1–1.5M when <0.80
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Gross rent ÷ PITIA (IO: ITIA). Short-term rent is counted at 80% of the appraiser's STR figure, 80% of an AirDNA projection, or 80% of the 12-month payout (gross bookings minus deductions).

Products & terms

Products: 15/30 fixed, 30yr fixed IO
Interest-only: Yes – 30-year fixed IO; 700 FICO; 75% (DSCR 1.00+) / 70% (0.75–0.99); no subordinate financing.
Prepayment penalty: Up to 5 years or the state maximum, whichever is lower. Structures: 6 months' interest on prepayments over 20% of the original balance; step-down (5/4/3/2/1, 4/3/2/1, 3/2/1, 2/1, or 2% for 1 year); or flat 2%–5%. Not allowed in AK, KS, MD, MN, NM, ND. NJ only when vesting in an S- or C-corp. IL when vesting in an S- or C-corp, or for a natural-person borrower when the APR is 8% or less (not LLCs, LLPs or trusts). MI flat 1% for 3 years; MS step-down max 5/4/3/2/1; OH flat 1% or less, loan over $116,356 (smaller loans 3–4 units only); PA loan over $319,777 (smaller loans 3–4 units only); RI flat 2% for 1 year; WA fixed-rate only; OR needs a state disclosure.
Reserves: DSCR 1.00+: 3 months under $500K, 6 months above. DSCR under 1.00: 6 and 9 months. First-time investor 12 months. Cash-out proceeds count.

Borrower & credit

Housing payment history: Max 1x30x12 on the subject and the primary residence (caps LTV at 75%); any mortgage on the credit report must also be within 1x30x12. Every borrower must currently own and be obligated on a US mortgage for 12 months. First-time investors need 0x30x12 and can't live rent-free.
Credit events (BK, foreclosure, short sale, modification): No significant derogatory event in the last 36 months: short sale, deed-in-lieu, mortgage charge-off, pre-foreclosure, foreclosure, bankruptcy (Ch 7/11/13), non-COVID/non-disaster forbearance, notice of default, lis pendens, 120-day mortgage late, or a default modification. Measured to the note date.
Forbearance, deferrals & modifications: A non-COVID, non-disaster forbearance counts as a significant credit event (36 months). COVID or non-default modifications don't count.
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; time-barred and medical collections ignored; collections on a payment plan can stay. Judgments, liens and delinquent taxes on title must be paid. Credit counseling OK after 12 on-time months. Non-traditional credit not allowed; 2 credit scores minimum.
Tradelines & credit depth: Every borrower: met with 3 credit scores (unless the only tradelines are authorized-user accounts); otherwise 3 tradelines reporting 12+ months or 2 tradelines reporting 24+ months, open or closed with activity in the last 12 months, and no derogatory history in the last 24 months. Self-reported/non-traditional, deferred, BK-discharged, Ch 13 trustee-paid, charge-off, collection and foreclosure accounts don't count. Minimum 2 credit scores; frozen credit not allowed.
First-time homebuyer: No
First-time investor: Allowed: 680 FICO, max 75%, DSCR 1.00+, 12 months' reserves, 0x30x12; not if living rent-free. Experienced borrowers must document 12 months of landlord history in the last 3 years.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: LLC, corporation or partnership (US-domiciled, up to 4 owners, all natural persons). Guarantor must own 25%+ (or be majority holder) and sign a notarized personal guaranty; each guarantor's credit is used for qualifying and pricing. Only one entity on title; ownership can't change within 90 days of application; up to 2 entity layers (no trust layers). Spousal consent needed over $1M and for guaranties in community-property states. Revocable trusts per Fannie Mae, 1-unit only. No POA with an entity or trust.
Gift funds & assets: Purchase only with a 10% borrower contribution and DSCR 1.00+. Not for reserves; no gift of equity.
Financed property / exposure limits: No limit on number of financed investment properties. Lender exposure per borrower: $5M or 10 loans (DSCR 1.00+); $2M or 2 loans when DSCR is under 1.00. No more than 5 properties acquired and currently financed in the last 12 months (including the subject; free-and-clear and land excluded). Condo projects: no more than the lesser of 3 units or 15% of the project. Concentration review when 3+ financed properties are in one ZIP/city with the same appraiser, 4+ in one MSA, or over 50% of the portfolio in one area.
Other borrower rules: US citizens, permanent and non-permanent residents (valid SSN; non-permanent residents need an eligible visa and a 2-year credit and employment history; DACA, TPS, diplomatic immunity and OFAC-country nationals ineligible). Foreign nationals, ITIN borrowers living in the US, land trusts, life estates and first-time homebuyers ineligible; no family-member tenants; no non-arm's-length deals or conflicts of interest (borrower is the builder or related to a party to the transaction); employment income must not be disclosed on the application.

Property

Eligible property types: SFR, 2-4, PUD, warrantable condo, non-warrantable condo (no condotels)
ADUs & unpermitted additions: Single-family homes with up to three ADUs, and 2–4 unit properties with ADUs, are eligible under Fannie Mae's ADU rules. Properties with unpermitted ADUs are ineligible. ADU rent follows the general rent rules (1007/1025).
Non-warrantable condo: Allowed with full questionnaire, no more than 2 non-warrantable features, max 75%. Commercial space up to 50% (subject unit fully residential), HOA delinquencies up to 20%, reserves at least 8%, investor concentration up to 60%, single-entity ownership up to 25%, new projects 50% sold with common areas complete (developer control OK with defined turnover). Litigation OK if non-structural, not health/safety, and damages under 25% of reserves or insured. A borrower may own no more than the lesser of 3 units or 15% of a project.
Condotel: True condotels with on-site reservation desks are prohibited; short-term vacation-rental condo projects are case-by-case.
Rural / acreage: Rural properties are not eligible for investment loans. Max 5 acres on this DSCR program.
Minimum square footage: 500 sq ft total living space.
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Rural, mixed use (and commercial, industrial or mixed-use zoning), zoning violations, condotels, co-ops, manufactured/mobile homes and manufactured-home condo projects, unpermitted ADUs, tenancy-in-common properties, timeshares, boarding houses/B&B/PadSplit, assisted living, working farms, vacant/undeveloped land, unique properties (barndominiums, log homes, domes), C5/C6, under 500 sq ft, no full kitchen with stove and oven, not suitable for year-round use, tribal land, STR-qualified properties where local code bans STRs. Leaseholds (where common, not tribal) and modular homes are eligible.
Declining markets: Declining market (per the appraisal): 5% LTV/CLTV reduction from the maximum for the transaction.
Appraisal, review & insurance: One full appraisal up to $2M, two above $2M (lower value used). No hybrid/reduced appraisals; under 180 days old at note, with an update if over 120 days; transfers allowed if under 60 days old at transfer. Review required on one-appraisal loans: CU 2.5 or less, otherwise a CDA, ARR or field review; a second appraisal is needed if the desk review is more than 10% low. Bergen and Essex (NJ) and Orange and Rockland (NY) counties need a CDA regardless of CU score. Escrow holdbacks not allowed. Hazard insurance per Fannie Mae.

Rental income

Rent used on a purchase: Lower of lease or 1007/1025; lease required if a tenant stays or a new lease starts within 60 days.
Rent used on a refinance: 1007/1025 plus the lease if tenant-occupied. A lease above market can be used up to 120% of market rent with 3 months' current receipts (deposits excluded); otherwise market rent is the cap.
Vacant / unleased refinance: Only if the property was recently renovated to be rented and the appraiser confirms with photos; market rent then used.
Short-term rental (Airbnb/VRBO): Yes – 1 unit only
Short-term rental documentation: Property must be legal and licensed as an STR where required; 1-unit only. Purchase: appraiser's STR rent schedule at 80%, or an AirDNA analysis at 80% of projected revenue (12-month forecast within 90 days of note, 50%+ occupancy, 4 comps in the same ZIP or within 2 miles, similar size/rooms/amenities). Refinance: 12-month remittance statement from Airbnb/VRBO-type manager plus an active-listing screenshot and an STR 1007; owned under 12 months is case-by-case using the purchase method.
Short-term rental limits: 1-unit only; 75% purchase/rate-term, 70% cash-out; minimum DSCR 1.00; 20% income haircut.

Refinance seasoning

Cash-out seasoning: 6 months on title (time held by the borrower's majority-owned entity or revocable trust counts). If the existing loan was a cash-out, it must be 6+ months old. The inherited/divorce-award exception does not apply to DSCR loans. No POA on cash-out. Must be off the market 1 month before application.
Delayed financing (cash purchase recoup): Allowed per Fannie Mae, priced and limited as a cash-out.
Recently listed for sale: Not currently listed; if listed in the past 6 months, off market at least 1 month before application, with cancelled listing, MLS search and intent letter. LTV uses the lower of list price or appraisal; cash-out also takes a 5% LTV reduction.

Other terms

Seller / interested-party concessions: Interested-party contributions up to 6%.
Secondary financing: No new subordinate financing. Existing seconds may stay on a refinance only if subordinated and recorded, held by a US financial institution (no private parties), within the max CLTV, with no balloon or negative amortization – and not with interest-only or a prepayment penalty.
State & local restrictions: Property must be in one of the 50 states. Not available in Baltimore City MD, Brooklyn NY, Puerto Rico, Guam or USVI; Hawaii: limited availability. CDA required in Bergen and Essex (NJ) and Orange and Rockland (NY). Prepayment penalties not allowed in AK, KS, MD, MN, NM, ND; NJ only for S/C-corporation borrowers; IL only for S/C-corporation borrowers or natural persons at an APR of 8% or less; restricted in MI, MS, OH, OR, PA, RI and WA. Texas 50(a)(6)/50(a)(4) ineligible.

Additional details

Notes: All borrowers must currently own & be obligated on a US mortgage for 12 mo. Not permitted: Baltimore City, Brooklyn, Guam, USVI, PR; HI limited availability. CDA required in Bergen/Essex NJ, Orange/Rockland NY. Declining market −5%. Existing subordinate financing OK on refi (not IO).

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