LAMD-D11 DSCR Standard 0.75+ | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 80% (720+, ≤$1M, DSCR ≥1)
Max LTV – rate/term refinance: 80% (720+, ≤$1M)
Max LTV – cash-out refinance: 75% (720+, ≤$1M)
Minimum loan amount: $150K
Maximum loan amount: $2.0M
Cash-out (cash in hand) limit: $500,000 max.
LTV reductions & overlays: 2–4 units 75%; warrantable condos 75%; non-warrantable condos 75% with 680 FICO and DSCR 1.00+. Interest-only: 700 FICO, 75% (DSCR above 1.00) or 70% (below 1.00). STR: 70%, 700 FICO, DSCR 1.00, max $1.5M. Declining market −5%. DSCR under 1.00 uses a lower grid (75% purchase at 700+ to $1M; minimum DSCR 0.75).

DSCR requirements

Minimum DSCR: 0.75
DSCR below 1.00: Yes – minimum DSCR 0.75; 12 months reserves. Purchase/rate-term/cash-out: 740+: 75/70/70 (≤$1M), 70/65/65 ($1.5M), 65/60/60 ($2M); 720–739: 75/70/70 (≤$1M), 70/65/65 ($1.5M), 65/60/NA ($2M); 700–719: 75/70/65 (≤$1M), 70/65/65 ($1.5M), 65/60/NA ($2M); 680–699: 70/70/60 (≤$1M only); 660–679: 60/60/60 (≤$1M only).
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Qualifying rent ÷ (P&I, or the IO payment on interest-only loans, at the initial note rate + taxes + insurance + flood + HOA + any subordinate financing). Rent schedule required. Purchase: lower of in-place lease or long-term market rent; vacant or delivered-vacant uses market rent; proposed leases not accepted. Refinance: in-place lease with 2 months' receipts, capped at 115% of market; without receipts, the lower of lease or market; vacant properties not permitted on refinances.

Products & terms

Products: 5/6 ARM, 30-year fixed, and 10-year interest-only versions (5/6 ARM IO on 30- or 40-year term, 30-year fixed IO, 40-year fixed IO).
Interest-only: Yes – 10-year IO (30-year term with 20-year amortization after IO, or 40-year term with 30-year amortization); 700 FICO; max 75% at DSCR 1.00+, 70% below 1.00; not available in Illinois.
Prepayment penalty: Required – at least 1 yr unless prohibited by state
Reserves: 3 months $150K–$500K; 6 months to $1.5M; 12 months to $2M; 12 months if DSCR is under 1.00. Cash-out counts.

Borrower & credit

Housing payment history: 0x30x12 on the subject, primary housing and every mortgage on the credit report, with 12 months documented (VOM/VOR, cancelled checks or bank statements; free-and-clear needs 12 months of taxes paid on time).
Credit events (BK, foreclosure, short sale, modification): 3 years for bankruptcy, foreclosure, short sale or deed-in-lieu (forbearance/modification/deferral treated the same). Bankruptcy from discharge/dismissal; foreclosure/short sale from completion, or the bankruptcy discharge if included in it.
Forbearance, deferrals & modifications: Forbearance, loan modifications and deferrals are treated like a short sale / deed-in-lieu for eligibility and pricing (same seasoning as other credit events).
Collections, charge-offs, judgments & liens: Collections and charge-offs must be paid unless $1,000 or less, disputed, or past the statute of limitations – and any left open require extra reserves equal to the balance. Medical collections can stay open with no extra reserves. Liens/judgments that could attach to title must be paid before closing (cash-out can pay them); IRS installment plans with 6+ payments made and no recorded lien (or a subordinated lien) are OK.
Tradelines & credit depth: 3 tradelines reporting 12 months (2 active in the last 12 months), borrowers combined; VOM, VOR or verified installment debt count; a tradeline shared by co-borrowers counts once.
First-time homebuyer: No
First-time investor: Allowed with DSCR 1.00+ and 700 FICO; no STR. First-time homebuyers not permitted.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Not permitted on this program (US citizens and permanent residents).
LLC / entity vesting: Individuals, tenants in common, joint tenants, revocable (inter vivos) trusts, LLCs and corporations; max 4 borrowers/guarantors. Entity must be US-formed and owned by individuals; every owner with 20%+ must personally guarantee and meet credit requirements; layered LLC allowed only if no more than 2 LLCs (each owned by individuals) own the vesting LLC. Land trusts, IRAs, blind trusts and LPs not eligible.
Gift funds & assets: Gifts for down payment and closing costs only (not reserves); no gift of equity. At 80% LTV or less no borrower contribution is required. Donors: relatives, domestic partners, fiancés, former relatives or godparents (no interested parties).
Financed property / exposure limits: Up to 20 financed properties; lender caps at 6 loans or $5M per borrower.
Other borrower rules: Non-arm's-length transactions not permitted. Max 4 borrowers/guarantors. Business-purpose affidavit and ACH from a US bank account required; no relative of the borrower/guarantor may occupy the property. Qualifying score is the highest qualifying score among borrowers/guarantors (middle of 3 or lower of 2; each needs at least 2 scores).

Property

Eligible property types: SFR, PUD, 2-4 (max 75%), warrantable condo (max 75%), non-warrantable condo
ADUs & unpermitted additions: One-unit homes with ONE accessory unit (full kitchen and bath) are eligible; multiple ADUs not permitted. The appraisal must show at least one comparable with the same use. ADU rent may be used on these business-purpose loans with a separate rent schedule for the ADU. Whether it's an ADU or a true 2-unit is judged by separate utilities, a separate postal address and whether it's rented. Unpermitted ADUs are not separately addressed; properties representing an illegal use under zoning are ineligible.
Non-warrantable condo: Max 75%, 680 FICO, DSCR 1.00
Condotel: No
Rural / acreage: Rural properties are not permitted on investment loans (rural = appraiser designation or factors like under 25% built-up, agricultural zoning, dirt road, comps over 5 miles, population under 25,000, amenities over 25 miles, 10+ acre lots, large outbuildings).
Minimum square footage: No general minimum. Condo units must be at least 500 sq ft (under 500 sq ft needs an exception with possible pricing hit on non-warrantable condos).
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Over 20 acres (10 acres standard; up to 20 if typical with comps; no truncating), condotels (except the condotel program), community land trusts, co-ops, earth-berm and dome homes, deed-restricted communities, houseboats, log homes (unless typical with 3 local comps), manufactured and modular homes, mixed use, model leasebacks, operating farms/ranches/orchards, Hawaii lava zones 1–2, illegal zoning use, hazardous materials/noxious odors/safety violations, oil and gas leases, agricultural or commercial use, reservation land, non-conforming use that can't be rebuilt, timeshares, vacant land, sinkholes. Leaseholds eligible.
Declining markets: Max LTV reduced by 5% in declining markets.
Appraisal, review & insurance: Second appraisal when the loan exceeds $2M (lower value used; different appraiser), in which case no ARR/CDA is needed; otherwise an enhanced desk review (ARR, CDA, or CU 2.5 or less) on every loan, within 10% of appraised value. Appraisals good 120 days, 180 with a recert. Hazard policy must include at least 6 months of rent-loss coverage (deductible max 5%).

Rental income

Rent used on a purchase: Lower of in-place lease or market; vacant uses market; proposed leases not accepted
Rent used on a refinance: In-place lease with 2 mo receipts, capped at 115% of market; otherwise lower of lease or market
Vacant / unleased refinance: Not permitted – vacant properties are purchase-only.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Property Guard compliance report confirming STRs are allowed (state, city, county) with no owner-occupancy requirement. Purchase: appraiser's market rent. Refinance: lower of appraisal rent or the 12-month third-party management history identifying the property.
Short-term rental limits: Max 70% LTV, $1.5M, 700 FICO, DSCR 1.00; not for first-time investors.

Refinance seasoning

Cash-out seasoning: Owned under 6 months (acquisition to note): LTV uses the lower of original purchase price or appraisal, including delayed financing. Refinancing a cash-out loan less than 12 months old counts as cash-out. Cash-out must be for business purposes with a letter of explanation; paying taxes 60+ days delinquent is cash-out.
Delayed financing (cash purchase recoup): Yes – LTV on lower of price or value
Recently listed for sale: N/A

Other terms

Seller / interested-party concessions: Interested-party contributions limited to 3% on investment properties.
Secondary financing: Subordinate financing allowed if the CLTV and combined loan amount stay within the program's max LTV and it meets Fannie Mae acceptable-subordinate-financing rules. Rate/term may pay off a purchase-money second or a closed-end second seasoned 12 months (HELOCs drawn in the last 12 months not eligible). Any subordinate financing payment is included in the DSCR.
State & local restrictions: Prepayment penalty is required on investment loans (at least 1 year unless state law prohibits; hard prepay on sale or refinance). No prepayment penalty allowed in: Alaska, Kansas, New Mexico; Illinois with individual vesting and a note rate above 7.99%; New Jersey not vested in a C or S corporation with a note rate above 5.99%; Pennsylvania 1–2 units with a loan amount below $329,411; Michigan 1-unit; Ohio 1–2 units; Rhode Island purchases. Where a prepay is prohibited it must be bought out. Limitations: Cook County, IL loans under $250,000 need a 3/2/1 step-down; Minnesota not permitted at conforming loan limits; Mississippi requires a step-down prepay. Interest-only is not available in Illinois. Any non-US-citizen borrower or titleholder must be legally permitted to buy in the subject state; citizens of China, Russia or Venezuela (Maduro regime) need legal review before approval. Texas investment loans need a non-homestead affidavit.

Additional details

Notes: Grid DSCR ≥1 (purch/RT/CO, $1M/$1.5M/$2M): 760–720 → purch 80/75/75 (720–739 $2M 70), RT 80/75/70, CO 75/70/60; 700–719 & 680–699 → purch 75/70/65, RT 75/70/65, CO 70/65/60 (680: 65/60/NA); 660–679 → 70/65/60, 70/65/60, 65/60/NA. Declining market −5%. Non-arm's-length not permitted.

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