LAMD-D14 DSCR Experienced Investor 0.80+ | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 680 (FN no FICO tier)
Max LTV – purchase: 80% (700+)
Max LTV – rate/term refinance: 80% at 700+ FICO on loans up to $1.5M; 70% at 680–699; foreign national 70%; first-time investor 75%. Caps: 75% above $1.5M (700+ FICO), 70% above $2M, 75% under $150K, 75% when DSCR is under 1.00, 75% with a 1x30x12 mortgage late or credit event.
Max LTV – cash-out refinance: 75% (700+); 680–699 CO N/A
Minimum loan amount: $100K
Maximum loan amount: $3.0M
Cash-out (cash in hand) limit: >65 LTV max $1M; ≤65 unlimited
LTV reductions & overlays: Warrantable condo 80%, non-warrantable 75%, 2–4 units 80%. 680–699 FICO: 70% and no cash-out. Loans under $150K: 75%. Over $1.5M: 700 FICO and 75%; over $2M: 70%; cash-out over $1.5M: 65% with 700 FICO. DSCR under 1.00: 75% (70% cash-out), max $1.5M, 720 FICO, no condotel or IO. A 1x30x12 mortgage late or any credit event in the last 7 years: 75%. Short-term rental income: −5%. Declining market with LTV over 65%: −5%. Cash-out on property owned under 6 months: −5% (value capped at price plus improvements).

DSCR requirements

Minimum DSCR: 0.80
DSCR below 1.00: Yes – 0.80–0.99: min 720 FICO, max 75% / CO 70%, max $1.5M, no condotel, no IO
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Gross rent ÷ PITIA. Fixed-rate loans use the note rate; ARMs use the greater of the note rate or the fully indexed rate (index + margin). Interest-only loans (fixed or ARM) use ITIA. DSCR may be rounded at the 4th decimal (0.9945 counts as 1.00). Rent used is the higher of the lease or 1007 market rent – market rent can be used up to 120% of the lease (lease $1,100, market $1,500 → $1,320). A lease above market is usable with 3 months' receipts. Vacant: full market rent with no vacancy factor.

Products & terms

Products: 30yr fixed, 5/6 & 7/6 ARM, 40yr fixed IO
Interest-only: Yes – 10-year interest-only on a 30-year term (10/20; 30-year fixed or 5/6 and 7/6 ARM) or a 40-year fixed term (10/30): minimum 700 FICO, max 80% LTV, max $3M. Not allowed when DSCR is under 1.00 or for foreign nationals. DSCR and reserves use the IO payment.
Prepayment penalty: Permitted, 1–5 years: 6 months' interest on prepayment above 20% of the original balance in any 12 months, 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 available in AK, MN, NM or ND. NJ only for S-corp/C-corp borrowers (not individuals or LLCs). MI and OH priced as no prepay. Other state limits: CO loans over $75K only; IL entities (individuals only if APR 8% or less); MI flat 1% max for 36 months; MS step-down only (max 60 months); NC loans of $100K or less capped at 2% in the first 36 months; OH loans of $116,356+ (or 3–4 units), max 1% flat for up to 60 months on 1–2 units; PA loans over $329,411 (or 3–4 units); WA fixed-rate only; NH, OR and VA have disclosure/enforcement limits.
Reserves: 3 months under $1M, 6 months $1M–$1.5M, 9 months over $1.5M; 12 months first-time investor; foreign national 12 months plus 2 per other property. None required on rate/term at 65% LTV or less. IO reserves use the IO payment; cash-out proceeds may be used.

Borrower & credit

Housing payment history: Max 1x30x12 (which caps LTV at 75%). Only the primary residence and the subject (on a refi) need VOM/VOR (no cancelled checks), but any late on any mortgage reporting on credit counts against the 1x30x12 limit. Free-and-clear ownership counts as 0x30 for each month owned. Borrowers with less than 12 months of housing history are ineligible, unless they live rent-free and own other property with a clean 12-month history (rent-free letter required).
Credit events (BK, foreclosure, short sale, modification): Bankruptcy, short sale, deed-in-lieu, mortgage charge-off and foreclosure need 36 months from application. Any such event within the last 7 years caps LTV at 75%. Loan modifications acceptable after 36 months.
Forbearance, deferrals & modifications: COVID forbearance must be released and the loan fully current. Any non-COVID deferral or forbearance is disqualifying. Modifications need 36 months.
Collections, charge-offs, judgments & liens: Judgments, garnishments and liens (including mechanic's liens) must be paid at or before closing. Collections/charge-offs under 24 months old may stay open up to $2,000 total; 24+ months up to $2,500 each; time-barred and medical collections ignored. IRS payment plans with 3 months of payments may stay open. Credit counseling OK after 12 on-time months with the counselor's approval. Past-due accounts must be brought current.
Tradelines & credit depth: Every borrower must meet tradeline minimums (authorized-user accounts don't count). Three reporting credit scores satisfies the requirement; otherwise 3 tradelines reporting 12+ months or 2 tradelines reporting 24+ months, with a 680 minimum FICO. Alternative: 4+ years of credit history with 8+ tradelines, at least one active in the last 12 months and one mortgage tradeline. At least 2 credit scores required; the higher representative score of all borrowers is used. Foreign nationals without US credit: 3 tradelines with a 2-year history from the home country.
First-time homebuyer: Allowed only under the first-time investor rules: max 75% LTV, DSCR 1.00+, 12 months' reserves and a verified 12-month housing payment history.
First-time investor: Allowed: max 75% LTV, DSCR 1.00+, 12 months' reserves, verified 12-month housing history. Experienced = owning or managing rental real estate 1 year in the last 3 (property-management employment counts).
Foreign national: Allowed: 70% purchase/rate-term, 65% cash-out (cash-out capped at $350K), max $2M, DSCR 1.00+, no IO, 12 months' reserves plus 2 months per additional property. Max 2 loans with this lender per foreign national. Visas B-1, B-2, J-1, J-2 (or Visa Waiver). Long list of ineligible countries (OFAC-sanctioned plus others such as Russia, Venezuela, Nicaragua and the Balkans except Greece). Without US credit: 3 tradelines with 2-year history from the home country and no mortgage lates in 24 months; 2-year housing history required. No gift funds; no trust vesting. Funds must be sourced and seasoned 60 days and held in a US account for 30 days (10 days for Canadians).
ITIN borrower: No (separate ITIN program is primary-only)
Non-permanent resident: Yes – must have been employed in the US for the last 24 months and hold an eligible visa (E, H-1B, L, O, TN, etc.) or eligible EAD category (C09, C10, C24, C31, C33/DACA). EAD must be unexpired at closing; visas expiring within 6 months need an employer sponsorship letter, and an expired visa needs a filed I-797. Visa Waiver Program countries don't need a visa. Diplomatic immunity ineligible.
LLC / entity vesting: Title may be in an LLC, partnership or corporation (investment only): US-domiciled, max 4 members, applicants must own at least 25% if not all members apply, no layered entities, personal guaranties from qualifying members, no POA. Revocable trusts may hold title (not trust plus individual). Trusts and entities can't be the borrower themselves; no life estates.
Gift funds & assets: Purchase only, from a family member. Borrower must document at least 10% in their own funds toward the down payment (it doesn't have to actually be contributed). Not for reserves; no gift of equity on investment property; no gifts for foreign nationals. Business funds OK with 25%+ ownership and access letters from the other owners; crypto allowed (60% value for reserves unless moved to a US bank). 1031 funds OK for down payment, not reserves.
Financed property / exposure limits: No cap on other financed properties when the subject is an investment property. Lender exposure: $7.5M or 10 loans per borrower; DSCR under 1.00 limited to $2M per borrower.
Other borrower rules: Neither the borrower nor any relative may occupy. Non-arm's-length purchases (relatives, employer/employee, landlord/tenant, builder, agent, owner-financed) are ineligible. Cash-out must be for business purposes (not consumer debt); rate/term cash back limited to the greater of $2,000 or 1% of the loan. POA allowed except cash-out and entity closings. Borrowers must be individuals; an LLC or other entity (or a trust) may hold title, but LLCs whose members include other LLCs, corporations, partnerships or trusts are ineligible. Loans to the originating lender's owners or executives, 501(c)(3)s, cannabis-industry business owners, diplomats and OFAC-sanctioned persons are ineligible. All borrowers must meet tradeline minimums.

Property

Eligible property types: SFR, SFR + 1 ADU, modular, 2-4, condo, co-op, rural ≤20 acres
ADUs & unpermitted additions: A single-family home with one ADU is eligible and ADU rent can count. The appraisal must show the ADU is a legal use under zoning – permits are not required to prove zoning compliance – with at least one sales comp and one rent comp that have an ADU. Only one ADU allowed. Purchase: lower of 1007 or lease for the ADU; refinance: 1007 market rent plus the current lease and 2 months' receipts.
Non-warrantable condo: Allowed at 75%. Project criteria: commercial space under 50% (subject unit 100% residential), project and common areas complete with 50%+ sold, HOA delinquencies up to 35% (60+ days), investor concentration up to 60%, single-entity ownership up to 50%, reserves at least 8% of budget (rising to 15% for applications on or after Jan 4, 2027), developer control acceptable if turnover is defined. Litigation case-by-case (structural/safety litigation declined); projects with unresolved critical repairs or unsafe conditions ineligible. Master policy per-unit deductible max $50K (HO-6 required if the master policy has a per-unit deductible). Exposure in one project: lesser of $2M or 15% of units.
Condotel: Allowed: $150K–$1M, 75% purchase / 65% refinance, DSCR 1.00+ (not allowed when DSCR is under 1.00). Unit 475+ sq ft with at least 1 bedroom and a full kitchen (full-size fridge and stove/oven). Hotel/resort/lodge names OK; the project must have a hotel or resort rating. Investor concentration up to 100%.
Rural / acreage: Rural allowed up to 20 acres; over 20 acres ineligible. Zoning alone (e.g., agricultural) doesn't disqualify a property if the highest and best use is legal residential and it can be rebuilt; working farms and agricultural properties are ineligible.
Minimum square footage: 500 sq ft total living space (condotels 475 sq ft with a bedroom).
Mixed use: Not eligible.
5+ units / multi-property: No
Ineligible properties: Manufactured homes, mixed use, commercial, barndominiums, log homes, geodesic domes, unique properties, boarding houses/PadSplit, assisted living, agricultural/working farms, rural over 20 acres, under 500 sq ft, C5/C6 condition, under construction, builder-inventory financing, tenancy-in-common properties (TIC vesting is OK), timeshares, tribal land, model-home leasebacks, vacant lots, properties listed for sale at loan purchase, properties whose zoning would not allow rebuilding to the current residential use and density (including coastal properties that can't be rebuilt). Work escrows not permitted. Co-ops and leaseholds (where common) are eligible; ground-lease transactions are ineligible – ask us about leaseholds.
Declining markets: When the appraiser marks property values as declining and LTV is over 65%, max LTV is reduced by 5%.
Appraisal, review & insurance: One full appraisal plus a secondary review up to $2M (CU/LCA score of 2.5 or less, or a CDA/ARR-type desk review); two appraisals over $2M. If the desk review comes in more than 10% below the appraisal, the lower value is used. Properties bought within 6 months with more than 25% appreciation need an additional valuation supporting value within 10%. Appraisals over 120 days old need a recertification. Transferred appraisals allowed (under 60 days old at transfer, 120 at closing, with a transfer letter). Flips (resale within 365 days at 10%+ higher price) need arm's length and open marketing; second appraisal if the price rose 10% within 90 days or 20% within 91–180 days.

Rental income

Rent used on a purchase: Higher of lease or 1007 market (market capped at 20% over lease)
Rent used on a refinance: Higher of lease or 1007 (market capped at 120% of the lease; higher lease needs 3 months' receipts). Leases must be at least 12 months originally (month-to-month after expiry OK).
Vacant / unleased refinance: Allowed – use full 1007 market rent with no vacancy factor.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: 12-month look-back via 12 monthly or an annual platform statement plus a screenshot of the active listing. No history needed when the appraiser confirms a short-term-rental market with no code/HOA restrictions and provides an STR-based 1007/1025 (or AMC STR analysis) for: new construction within 120 days, a seller-occupied home being converted to STR, or (by exception) a long-term rental being converted.
Short-term rental limits: 5% LTV reduction when STR income is used to qualify.

Refinance seasoning

Cash-out seasoning: One borrower on title at application. Owned under 6 months: 5% LTV reduction and value is the lower of purchase price plus documented improvements or appraisal. No wait for inherited or divorce-awarded property. Property must be off the market 1 month before application; if listed in the last 6 months, LTV uses the lower of list price or appraisal.
Delayed financing (cash purchase recoup): Allowed within 6 months of a cash purchase (arm's length, no financing, no liens, funds sourced; gifts can't be reimbursed). Loan limited to documented investment plus costs. If purchase funds were borrowed against another asset, proceeds must pay that loan down.
Recently listed for sale: Must be off the market at least 1 month before application. Rate/term listed within 3 months, or cash-out listed within 6 months: LTV uses the lower of list price or appraised value.

Other terms

Seller / interested-party concessions: Seller/interested-party contributions up to 6% at any LTV for investment properties (combined giveaways under $1,000 ignored). Excess is deducted from price.
Secondary financing: Not allowed on DSCR loans (new or existing).
State & local restrictions: Not available in Baltimore, MD or Philadelphia, PA, or in US territories. No prepayment penalties in AK, MN, NM or ND; NJ prepayment penalties only for S-corp/C-corp borrowers; MI and OH priced as no prepay; other state prepay limits apply (CO, IL, MS, NC, OH, PA, WA).

Additional details

Notes: Not permitted in Baltimore MD or Philadelphia PA. Subordinate financing not allowed. Declining market −5% when LTV >65%.

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