LAMD-D36 DSCR 5–8 Units | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 75% (DSCR above 1.20, 720+ FICO, loan up to $1.5M)
Max LTV – rate/term refinance: 75%
Max LTV – cash-out refinance: 70% (DSCR above 1.20; 740+ up to $1.5M, 720–739 up to $1M)
Minimum loan amount: $400K
Maximum loan amount: $2.5M
Cash-out (cash in hand) limit: $500,000 max.
LTV reductions & overlays: Grids by DSCR band (above 1.20, or 1.10–1.19 at 740+ only) and loan size ($1M–$2.5M). Cash-out capped at $2M and not available under 680 FICO (680–699: 50% up to $1M only); 660–679 purchase/rate-term max $1.5M (65% to $1M, 60% to $1.5M). Credit event 2–4 years old allowed only at 70% LTV or less, with 6 extra months of reserves.

DSCR requirements

Minimum DSCR: 1.10 (1.10–1.19 tier: 740+ only, 70% / CO 65%)
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum DSCR 1.10. Long-term (12-month) market rent; rent schedule required. Purchase: lower of current rent (appraisal/contract) or market; vacant units at 90% of market. Refinance: lower of in-place lease or market with 2 months' receipts; rented without receipts uses the lower of lease or 90% of market; vacant units at 90% of market; no more than 35% of units vacant. DSCR = qualifying rent divided by P&I plus taxes, insurance, flood, HOA and any subordinate financing payment; IO loans qualify on the IO payment.

Products & terms

Products: 5/6 ARM, 30yr fixed, IO versions
Interest-only: Yes – 10-year IO on the 5/6 ARM and 30-year fixed (30-year term, 20-year amortization after the IO period). Not available in Illinois.
Prepayment penalty: 5-year hard prepayment penalty required (six months' interest on prepayments over 20% of the original balance, or a fixed percentage of at least 3%), except where a state prohibits it.
Reserves: 3 months up to $1M, 6 months to $2M, 9 months above; +6 months if a credit event is within 4 years.

Borrower & credit

Housing payment history: No more than 1x30x12 and 0x30x6. Rent-free not permitted.
Credit events (BK, foreclosure, short sale, modification): 4 years standard for bankruptcy, foreclosure, short sale/DIL; 2 years allowed at 70% LTV or less. COVID forbearance/deferral isn't derogatory if fully reinstated with 3 payments since, or 6 consecutive payments after exiting.
Forbearance, deferrals & modifications: Forbearance, loan modifications and deferrals are treated like a short sale / deed-in-lieu for eligibility and pricing (4 years standard, 2 years at 70% LTV or less). Exception: COVID-19 forbearance/deferral is not derogatory if the loan was fully reinstated (deferred balance paid from allowable assets) with the last 3 consecutive payments made, or the borrower exited and made 6 consecutive payments.
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 filed lien (or a lien subordinated by the IRS) are OK, with the balance counted in CLTV. Non-mortgage accounts no more than 30 days late at application (bring current or pay at closing); mortgages must be current. Unresolved disputed accounts (other than collections) capped at $2,000 total.
Tradelines & credit depth: 3 tradelines reporting 12 months (2 active in the last 12 months); bureau accounts, VOM, VOR or verified installment debt count; a tradeline shared by co-borrowers counts once.
First-time homebuyer: Not permitted (first-time homebuyer = no property ownership, directly or through an entity, in the past 3 years).
First-time investor: Not published – ask us about your scenario
Foreign national: No
ITIN borrower: No
Non-permanent resident: Allowed with a valid SSN and current visa (E-1/2/3, EB-5, G-1–G-5, H-1, L-1, NATO, O-1, R-1, TN); visa expiring within 6 months needs proof of extension. Citizens of China, Russia or Venezuela need additional legal review.
LLC / entity vesting: Individuals, tenants in common, joint tenants, revocable trusts, LLCs and corporations. Entities must be US-formed and owned by individuals (layered LLC allowed with up to 2 owning LLCs owned by individuals; a corporation can't be owned by another entity); every 20%+ owner must personally guarantee. Land trusts, IRAs, blind trusts and LPs not eligible.
Gift funds & assets: Gifts for down payment and closing costs only (not reserves); no borrower minimum contribution; no gift of equity. Donors: relatives (blood, marriage, adoption, guardianship), fiancé(e)s or domestic partners; no interested parties.
Financed property / exposure limits: Lender caps exposure at 6 loans or $5M per borrower (whichever comes first); no other financed-property limit published.
Other borrower rules: Qualifying score is the highest qualifying score among borrowers (middle of 3 or lower of 2); each borrower needs at least 2 scores. No relative of the borrower may live in the property. Business-purpose affidavit and ACH from a US bank account required. Power of attorney not allowed on cash-out or entity closings.

Property

Eligible property types: 5–8 unit residential
ADUs & unpermitted additions: Not applicable – 5–8 unit residential buildings.
Non-warrantable condo: N/A
Condotel: N/A
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: Not published – ask us about your scenario
Mixed use: No
5+ units / multi-property: 5–8 residential units, $400K–$2.5M, commercial narrative appraisal plus a commercial desk review; second appraisal over $2M.
Ineligible properties: Over 20 acres (10 acres standard; up to 20 if typical with comps; no truncating), condotels, 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, 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, rural properties, and C5/C6 or Q5/Q6 condition/quality (unless cured before funding). No escrow holdbacks. Leaseholds eligible.
Declining markets: N/A
Appraisal, review & insurance: Commercial narrative appraisal. Second appraisal when the loan exceeds $2M (different appraiser; lower value used). Commercial desk review from a lender-approved vendor required. Appraisals good 120 days, 180 with a recert. Hazard policy needs at least 6 months of rent-loss coverage and a deductible of 5% or less.

Rental income

Rent used on a purchase: Lower of current rent or market; vacant units 90% market
Rent used on a refinance: Lower of lease or market with 2 months' receipts; without receipts, lower of lease or 90% of market. Vacant units use 90% of market rent; no more than 35% of units may be vacant.
Vacant / unleased refinance: Vacant units at 90% market; ≤35% units vacant on refi
Short-term rental (Airbnb/VRBO): No – long-term (12 mo) market rent only
Short-term rental documentation: N/A
Short-term rental limits: N/A

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): Treated as a cash-out refinance (cash-out grid and limits apply). If owned under 6 months, LTV uses the lower of the original purchase price or the appraised value. No other delayed-financing requirements published.
Recently listed for sale: N/A

Other terms

Seller / interested-party concessions: Interested-party contributions limited to 3% on investment properties; up to 7% when the seller is the builder and there is no lender credit on the closing statement.
Secondary financing: Subordinate financing allowed if it is acceptable subordinate financing under agency rules and the CLTV/combined loan amount stays within the program's max LTV and loan amount. 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: 5-year prepayment penalty required except where state law prohibits it. No prepayment penalty in Alaska, Kansas or New Mexico; Illinois with individual vesting and a rate above 7.99%; New Jersey unless vested in a C or S corporation (when the rate is above 5.99%); or on Rhode Island purchases. Mississippi requires a step-down prepay; Minnesota limited at conforming loan limits. Interest-only not available in Illinois. Non-US-citizen borrowers must be permitted to buy under the property state's law.

Additional details

Notes: Commercial narrative appraisal; 2nd appraisal >$2M. Business funds allowed. Assets seasoned 60 days.

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