LAMD-D20 DSCR Standard 0.75+ & No-Ratio | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 80% (DSCR ≥1, 720, ≤$1M)
Max LTV – rate/term refinance: 80% (DSCR ≥1, 720, ≤$1M)
Max LTV – cash-out refinance: 75% (DSCR ≥1, 720, ≤$1M)
Minimum loan amount: $125K
Maximum loan amount: $2.0M
Cash-out (cash in hand) limit: >60 LTV max $500K; ≤60 unlimited
LTV reductions & overlays: 2–4 units, warrantable condos and non-warrantable condos each capped at 75%. Short-term rental income: 70% and DSCR 1.00+. Interest-only: 75% (DSCR 1.00+) or 70% (DSCR 0.75–0.99). Non-permanent residents: 75%, no cash-out. Declining market (either appraiser): 5 points off the most restrictive applicable max.

DSCR requirements

Minimum DSCR: 0.75 or no ratio
DSCR below 1.00: Yes – DSCR 0.75–0.99. Purchase/RT: 75% (700, ≤$1M), 70% (680, ≤$1M), 60% (660, ≤$1M), 70% (700, ≤$1.5M), 65% (700, ≤$2M). Cash-out: 70% (720, ≤$1M), 60% (660, ≤$1M), 65% (700, ≤$1.5M), 60% (740, ≤$2M). Interest-only needs 700 FICO, max 70%. Not available for short-term rental income or first-time investors (DSCR 1.00+ required).
No-ratio (no DSCR calculated): Yes – Purchase/RT: 75% (740, ≤$1M), 70% (720, ≤$1M), 65% purchase / 60% refi (680, ≤$1M), 60% (660, ≤$1M), 70% (740, ≤$1.5M), 65% (700, ≤$1.5M), 65% (740, ≤$2M). Cash-out: 65% (740, ≤$1M), 60% (660, ≤$1M), 60% (700, ≤$1.5M), 60% (740, ≤$2M). No interest-only; no short-term rental income or first-time investors (DSCR 1.00+ required).
How DSCR and qualifying rent are calculated: Gross rent ÷ qualifying payment (P&I on the amortizing term at the note rate plus taxes, insurance and dues; Minnesota ARMs qualify at the higher of the fully indexed rate or the note rate). IO uses the interest-only payment. Solar lease/loan payments are added to the payment. No-ratio option needs no DSCR at all (no IO on no-ratio). DSCR 0.75–0.99 allowed at reduced LTVs.

Products & terms

Products: 15/30 fixed, 30/40 fixed IO, 5/6 7/6 10/6 ARM
Interest-only: Yes – 700 FICO; 75% (DSCR≥1) / 70% (≥0.75); not for no-ratio
Prepayment penalty: Allowed where legal, 1–5 year terms: flat 5%, declining 5-4-3-2-1 (scaled to term), or 6 months' interest on prepayments over 20% of original balance in 12 months. Not in AK, MD, MI, MN, NM; limits in IL, NJ, OH, PA, MS, RI.
Reserves: Subject property only: 3 months up to $500K, 6 months $500K–$2M (PITIA, or ITIA for IO). Cash-out proceeds can count.

Borrower & credit

Housing payment history: 0x30x12 on the subject and every borrower's/guarantor's primary residence (whether or not they're on the note or title), via credit report, VOM/VOR, cancelled checks or bank debits; private or non-institutional VOMs/VORs also need 6 months of payment proof. Other mortgages on credit must be 0x30x12. All mortgage/rent payments must be current at closing. Rolling lates count individually, and payments missed under a forbearance agreement count as lates. A past-due balloon cured within 180 days counts as a 1x30. Subject taxes more than 1 year delinquent need an exception. Primary can be free and clear. Rent-free as a dependent with family OK with a rent-free letter.
Credit events (BK, foreclosure, short sale, modification): 36 months for foreclosure, short sale, pre-foreclosure or deed-in-lieu (from completion), Ch 7/11/13 bankruptcy (from discharge/dismissal), a default modification (from signing), a notice of default or lis pendens, a 120+ day mortgage late (from when brought current), or a balloon paid 180+ days late. A charged-off second mortgage counts from the charge-off date. Multiple bankruptcies are not allowed. Timeshare foreclosures are treated as consumer debt, not a credit event.
Forbearance, deferrals & modifications: Payments missed during any forbearance are counted as late payments, so the housing history must still be 0x30x12. A modification due to default needs 36 months.
Collections, charge-offs, judgments & liens: Collections/charge-offs in the last 3 years over $5,000 (individually or combined) must be paid; medical collections under $15,000 are excused. Judgments, garnishments and title liens must be paid. Income-tax liens must be paid unless on an IRS plan that is current and not liened. Past-due accounts brought current. Borrowers in credit counseling/debt management are ineligible. Any 60-day consumer late in the last 4 years must be explained.
Tradelines & credit depth: No minimum tradeline count for DSCR (the 2-tradeline rule applies only to borrowers using income to qualify). The borrower with the highest ownership share (and any tied borrowers) must have at least two credit scores. Qualifying score is the middle of three (lower of two) for the highest-ownership borrower; lowest among ties. Tri-merge required; no frozen bureaus. Non-permanent residents need established US credit.
First-time homebuyer: No
First-time investor: Allowed with 700+ FICO and DSCR 1.00+ – no exceptions. Experience = 12 months owning/managing income property within the last 36 months, shown on the REO schedule. First-time homebuyers are ineligible (no borrower or guarantor can be one).
Foreign national: No
ITIN borrower: No
Non-permanent resident: Allowed at 75% max, no cash-out. Needs SSN and US credit; visas E-1/E-2/E-3, EB-5, G-1–G-5, H-1B, L-1, NATO, O-1, R-1, TN. No asylum status.
LLC / entity vesting: LLC, LP, GP or corporation formed for real-estate ownership; up to 4 owners. Guarantors must be a managing member or majority owner with 25%+ and are fully underwritten; all borrowers give personal recourse. Up to two entity layers allowed if the ownership chain is clean (no trusts in the chain). Spousal consent in community-property states (incl. CA). No POA for entities.
Gift funds & assets: Purchase only, from family, not above 80% LTV. 100% gift allowed under 75% LTV; at 75%+ the borrower must put in 5% of their own. No gift of equity. Not for reserves. Crypto, foreign assets (60 days seasoned) and 1031 funds (not reserves) acceptable.
Financed property / exposure limits: Up to 20 financed 1–4 unit properties per borrower/guarantor; lender caps its own servicing at 10 loans or $7.5M.
Other borrower rules: Professional investors and first-time investors only; max 4 borrowers. US citizens, permanent residents and eligible non-permanent residents. Foreign nationals, FTHBs, irrevocable/land/blind trusts, entities layered with a trust, non-profits, asylum-status and diplomatic-immunity borrowers, OFAC-sanctioned persons, and tenants-in-common unless all vested parties are borrowers are ineligible. Non-arm's-length purchases (family sales, estates, employer sales) ineligible. Limited POA allowed except cash-out and entities.

Property

Eligible property types: SFR, PUD, 2-4, warrantable & non-warrantable condo, leasehold
ADUs & unpermitted additions: One legal ADU on a single-family home is acceptable (Fannie Mae ADU rules apply; 2–4 units can't have ADUs). Multiple dwellings on one lot beyond one legal ADU are ineligible. Unpermitted additions/alterations and deferred maintenance must meet program rules (not an automatic decline). Zoning must be legal (legal non-conforming must be 100% rebuildable).
Non-warrantable condo: Allowed at 75% with full project review; no stacking of non-warrantable features. Limits: single-entity ownership 30%, commercial space 49%, investor concentration 70%, HOA delinquencies 25% (60+ days, including special assessments), reserves 10%, common areas 100% complete, no mandatory dues or first-refusal rights. Developer-controlled HOAs case-by-case. Litigation OK only if non-structural, not affecting marketability, and damages under 25% of reserves or covered by insurance. Florida 3+ story buildings 30+ years old (25 near the coast) need completed SB-4D inspections, repairs and reserve study.
Condotel: Not eligible (also ineligible: timeshare units, live/work condos, projects with rental registration services or limits on owner occupancy).
Rural / acreage: Rural and agricultural-zoned properties are case-by-case with exception approval and a pricing adjustment. Over 20.00 acres is ineligible (no truncating). Working farms ineligible.
Minimum square footage: Single-family homes under 700 sq ft are ineligible.
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Manufactured/mobile homes, co-ops, condotels, timeshare and live/work condos, fractional ownership, mixed use (daycare, doctor's office, etc.), 5+ units, multiple units conveyed on a single deed, multiple dwellings on one lot (beyond one legal ADU), vacant land, unique properties, single-family under 700 sq ft, over 20.00 acres, working farms, commercial/industrial zoning, zoning violations, under construction, mandatory country-club memberships, boarding houses/B&B/SRO, group or healthcare homes, domes, earth-berm homes, log homes, houseboats, barndominiums, theme-park resort properties, builder model leasebacks, Native American/Hawaiian Home Lands, Hawaii lava zones 1–2, C6 condition, marijuana-related use, PACE/HERO-encumbered homes unless paid off. Ineligible condo projects: those in litigation over safety, soundness, habitability or functional use; projects with rental-registration services or limits on owner occupancy; assisted-living/continuing-care projects; projects with private transfer fees not benefiting the association. Agricultural-zoned and rural properties need lender exception approval. Leaseholds are eligible.
Declining markets: Max LTV reduced by 5 points from the most restrictive applicable max when the appraiser marks the market as declining (with two appraisals, either one counts).
Appraisal, review & insurance: One full appraisal up to $2M (two above $2M or on HPML flips, lower value used) plus CU/LCA 2.5 or less or a desk review within 10%. Flips: second appraisal if price rose 10% within 90 days or 20% within 180 days. Rent-loss insurance of 6 months required; max deductible 5%.

Rental income

Rent used on a purchase: Lower of the lease or 1007/1025 market rent; no lease needed if none is being transferred. Purchase can be vacant.
Rent used on a refinance: Lower of lease or market rent; a higher lease is usable with 3 consecutive months of receipts.
Vacant / unleased refinance: Not eligible unless the property was just renovated to be rented and the appraiser confirms the completed work with photos – then market rent is used.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Must be legal and common for the area. Purchase: 100% of the appraiser's STR market rent (1007/1025 or a supplemental form from the same appraiser). Refinance: lower of the appraiser's STR estimate or the full 12-month actual history from Airbnb/VRBO/a property manager (12 months required).
Short-term rental limits: Max 70% LTV; minimum DSCR 1.00.

Refinance seasoning

Cash-out seasoning: 6 months of ownership (acquisition to note). Refinancing a loan that gave cash-out less than 12 months ago counts as cash-out. Paying delinquent taxes (60+ days) or PACE loans counts as cash-out. Inherited or divorce-awarded property has no seasoning (buyout agreement, probate cleared). No POA on cash-out. Cash-out can't fund renovations that make the property uninhabitable.
Delayed financing (cash purchase recoup): Allowed within 180 days of a cash purchase (arm's length, funds documented, no liens); priced as cash-out, LTV on the lower of appraisal or price plus documented improvements, loan capped at the documented investment.
Recently listed for sale: If listed within 6 months of the note date, the listing must be cancelled before application with a signed explanation. Multiple listings within 12 months are ineligible.

Other terms

Seller / interested-party concessions: Interested-party contributions up to 6%. A borrower acting as their own agent counts toward the limit. Lender/broker employees can't be a party to the loan.
Secondary financing: Not permitted (new or existing). A rate/term refi can pay off a purchase-money second or a HELOC with under $5,000 drawn in 12 months.
State & local restrictions: Prepayment penalties not allowed in AK, MD, MI, MN, NM; IL only for entity borrowers (Cook County only over $250K); NJ only for S/C-corps; OH not on 1–2 units; PA not on 1–2 units under $319,777 (adjusts annually); MS 1-unit must be a declining structure; RI needs written consent. New-construction tax estimate 1.25% in CA, 1.5% elsewhere.

Additional details

Notes: Rent loss insurance 6 mo required. Non-arm's-length ineligible. Declining market −5%. Escrow waivers eligible.

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