LAMD-D15 DSCR Prime (Prepay Required) | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 620 floor (no FICO-by-loan-size grid in published rules)
Max LTV – purchase: Base max not published – ask us. Condos 70%; gift of equity 70%; declining market −5%; hybrid appraisal 70%.
Max LTV – rate/term refinance: Base max not published – ask us. Condos 70%; recently inherited 60%; declining market −5%; hybrid appraisal 65%.
Max LTV – cash-out refinance: Base max not published – ask us. Condos 70%; listed for sale in last 12 months 70%; inherited/legally awarded 60%; declining market −5%; hybrid appraisal 60%.
Minimum loan amount: $100K (DSCR 1.25 required for $100–150K)
Maximum loan amount: $1.5M
Cash-out (cash in hand) limit: $750K above 65% LTV; $1.5M at or below 65%.
LTV reductions & overlays: Condos 70%. Not eligible: DSCR under 1.00, 40-year amortization, no-prepay loans, STR, FTHB, suburban/rural-residential exception. Listed within 12 months (cash-out) 70%. Recently inherited 60%. Gift of equity 70%. Declining market −5%.

DSCR requirements

Minimum DSCR: 1.00 (1.25 for $100–150K)
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Lower of market rent or lease ÷ PITIA; minimum 1.00 (1.25 for loans $100K–$150K). Same 120% lease/market rules as the standard tier.

Products & terms

Products: 5/6 and 7/6 ARMs and 30-year fixed (30-year amortization only; no 40-year amortization). Interest-only not confirmed for this tier – ask us.
Interest-only: Not confirmed for this tier (interest-only is listed as eligible only on the standard tier); 40-year amortization is not eligible. Ask us before quoting interest-only.
Prepayment penalty: Required – no-prepay loans and no-prepay states ineligible. Options: standard 1–5 year (6 months' interest on prepayments over 20% of original balance), flat 5% for 3–5 years, or tiered/declining 1–5 years (e.g. 5-year: 5/4/3/2/1%).
Reserves: None at 70% LTV or less; 6 months above 70% LTV; cash-out 6 months. Cash-out proceeds can count; gift funds can't. Based on the greatest payment if multiple loans. 6 extra months may substitute for rent-loss insurance.

Borrower & credit

Housing payment history: 1x30x12 (no rolling lates); 0x30x12 if a credit event is under 4 years old. Only one borrower needs to meet it; all must be current at application. Primary and subject verified; other REO only if on credit. No mortgage on credit requires pre-approval unless free-and-clear with taxes current, a prior 12-month history, a private VOM with 12 months of bank records, or rent-free with a spouse. Borrowers temporarily rent-free after selling a home are fine with the prior 12 months documented.
Credit events (BK, foreclosure, short sale, modification): 4 years for foreclosure, short sale, DIL, default modification, NOD, single bankruptcy or 120+ day late; multiple events within 4 years or multiple bankruptcies ineligible.
Forbearance, deferrals & modifications: A natural-disaster or non-financial-hardship forbearance/deferral on the primary or subject must be completed with 2 payments made since (purchase or rate/term) or 6 payments (cash-out); the deferred balance can be paid off by the refinance. A primary residence currently in forbearance is ineligible; one other REO in forbearance is OK.
Collections, charge-offs, judgments & liens: Judgments and liens affecting title must be paid. Non-title charge-offs/collections open under 2 years and over $10,000 (individually or combined) must be paid. Medical collections under $50,000 can remain. IRS payment plans OK if current and not liened. Borrowers in credit counseling or debt management are not eligible; no private credit-repair companies.
Tradelines & credit depth: Tradelines waived if the qualifying borrower has three credit scores. Otherwise each borrower needs 2 tradelines (or joint borrowers 3 combined), rated at least 12 months with activity in the last 24 months; open or closed OK; no derogatory history in the last 24 months. Current housing not on credit can count if supported by bank records. Authorized-user accounts and non-traditional credit don't count.
First-time homebuyer: No
First-time investor: Allowed (680 FICO, DSCR 1.00+); first-time homebuyers not eligible.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Not eligible on this tier.
LLC / entity vesting: LLC, sole proprietorship, LP, LLP, S or C corp (US-registered); up to 4 owners and up to two entities/two layers. Guarantor must be an individual owning 25%+ and is credit-checked like a borrower. No POA when closing in an entity. Revocable trusts per Fannie Mae.
Gift funds & assets: Purchase only, from family. Under 75% LTV no borrower contribution needed; above 75% the borrower must show 5% of their own funds (doesn't have to use them). Not for reserves. Gift of equity from family allowed up to 70% with a 0x30x12 seller mortgage, tenant in place and DSCR 1.00+.
Financed property / exposure limits: Up to 15 financed residential properties; lender exposure $5M or 10 loans.
Other borrower rules: Business-purpose only: borrower signs a business purpose / non-owner-occupancy certification. Ineligible: borrowers in active litigation, diplomatic immunity, foreign nationals, irrevocable/land/blind trusts, vesting in retirement vehicles, parties on GSE/HUD LDP exclusion lists, non-profits. Non-arm's-length purchases not permitted. All parties screened against OFAC. First-time homebuyers and non-permanent residents not eligible on this tier; Georgia loans must close in an entity.

Property

Eligible property types: SFR, PUD, condo, 2-4, modular; warrantable & non-warrantable condo
ADUs & unpermitted additions: Up to 2 ADUs on a single-family home (not on 4-unit properties; manufactured-home ADUs not permitted), minimum 400 sq ft, typical for the area per appraisal comps, conforming to zoning. Permitted ADU rent counts with a comp that has a permitted ADU, a market rent survey and a lease with 1 month's receipt (on a purchase, the borrower attests they'll rent it). Unpermitted ADUs are acceptable if built in a workmanlike manner and conforming to the property, but their rent can't be used to qualify. Unpermitted room additions: appraiser confirms workmanlike quality.
Non-warrantable condo: Up to two non-warrantable features: presale 30%, investor concentration up to 70%, commercial up to 50%, recreational leases, single-entity ownership up to 30%, HOA delinquencies up to 25%, master deductible up to 10%, reserves under 10% (never below 5%), mandatory memberships up to 10% of price. Ineligible: structural/functional litigation against the developer, less than full replacement-cost insurance, non-gut conversions, flood zones without master flood coverage, incomplete projects or HOA not turned over. California SB326 balcony inspections and Florida structural inspections (30+ years, or 25 near the coast, 3+ stories) required. Limited review established projects: 75% (70% in Florida).
Condotel: Not eligible.
Rural / acreage: Rural not permitted; max 5 acres.
Minimum square footage: 500 sq ft per unit; no kitchenettes
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Manufactured homes, mixed use, condotels, co-ops, rural/agricultural zoning, mandatory rental pools, live/work condos, log homes, domes, unique properties, working farms, boarding houses/room leases, assisted living, timeshares/fractional, tenants-in-common, 'shouses', builder model leasebacks and inventory, under construction, C5/C6, commercial or industrial zoning (except condos), zoning violations, Native American leased land, lava zones (unless meeting Fannie Mae), leased land not exceeding the loan term by 5 years, community land trusts. Under 500 sq ft per unit (no kitchenettes). Mandatory club fees over 10% of price ineligible. Properties near power plants, industrial factories or environmental hazards ineligible.
Declining markets: 5% LTV reduction from the maximum the borrower qualifies for, but not below 75% on a purchase or 70% on a refinance.
Appraisal, review & insurance: One full appraisal plus a review product (CU/LCA 2.5 or less, or a desk review within 10%; otherwise field review or second appraisal). Transferred appraisals OK unless borrower- or seller-ordered. Hybrid appraisals allowed up to $1.5M (680 FICO, 70% purchase / 65% rate-term / 60% cash-out; not for rural, leasehold, 5+ acres, condotels). Rent-loss insurance of 6 months (or 6 extra months of reserves). Declining market −5% (floor 75% purchase / 70% refi).

Rental income

Rent used on a purchase: Market rent (1007/1025); lease <market with <6 mo left → market up to 120%
Rent used on a refinance: Lesser of lease or market; lease above market up to 120% with 3 mo receipts
Vacant / unleased refinance: Allowed if recently rehabbed or listed for rent (proof required)
Short-term rental (Airbnb/VRBO): No
Short-term rental documentation: N/A
Short-term rental limits: Short-term rentals not eligible on this tier.

Refinance seasoning

Cash-out seasoning: Existing mortgage must be 6+ months old (except delayed financing). Inherited or legally awarded property has no wait but is capped at 60%. Refinancing a loan that gave cash-out less than 12 months ago counts as cash-out. Paying taxes 60+ days delinquent or loans with 59+ days accrued interest counts as cash-out. Refinancing out of a blanket loan is cash-out. A property the borrower just moved out of needs a lease and 3 months of payments at the new home.
Delayed financing (cash purchase recoup): Allowed for cash purchases owned under 6 months (arm's length, documented funds); priced as cash-out; LTV on the lower of price or appraisal; gift funds can't be recouped.
Recently listed for sale: Can't be listed at application. Seasoning runs from listing removal to the note date; LTV uses the lower of appraisal or lowest list price in the last 12 months. A prepay of at least 2 years is required: rate/term permitted; cash-out permitted at 70% max.

Other terms

Seller / interested-party concessions: Up to 6% of the purchase price for closing costs and prepaids only (no cash credit); excess is deducted from price.
Secondary financing: No new subordinate financing (closed-end seconds are a separate product); existing seconds may stay on a refinance if subordinated, and their payments are included in DSCR.
State & local restrictions: Georgia loans must close in an entity. Loans without a prepay (or in no-prepay states) are not eligible on this tier.

Additional details

Notes: Georgia must close in entity. Prime-credit DSCR tier with PPP required.

← LAMD-D14 · All programs · LAMD-D16 →