LAMD-D38 DSCR 5–8 Units & Mixed Use | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 700
Max LTV – purchase: 75% (≤$1.5M)
Max LTV – rate/term refinance: 70%
Max LTV – cash-out refinance: 65%
Minimum loan amount: $300K
Maximum loan amount: $3.0M (5-8 res); $2.0M (mixed use)
Cash-out (cash in hand) limit: Max $1M.
LTV reductions & overlays: Max 75% purchase / 70% rate-term / 65% cash-out (720+ up to $1.5M), stepping down with loan size; 700 FICO max $2M. CT and NJ: 70% purchase / 65% refi with 720 FICO. No declining-market adjustment.

DSCR requirements

Minimum DSCR: 1.00
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Eligible rents ÷ PITIA (IO may use ITIA), minimum 1.00. Leased units at the lower of market or lease; vacant units at 75% of market (max 1 vacancy on 2–3 units, 2 on 4+), must be actively marketed. Rents reduced by any management fee on the appraisal. Commercial income capped at 49.99% of total.

Products & terms

Products: 15/30 fixed, 5/6 7/6 10/6 ARM
Interest-only: Yes
Prepayment penalty: Up to 5 yr; fixed (≥3%) or declining (5% max, not below 3% in first 3 years) structures only. IL & NJ: not on loans vested to individuals. MS: declining only. OH: allowed on properties with more than two units. PA: not on 2-unit loans at or below $329,411 (2026). AK, MI, NM: ask us to confirm before quoting a prepay.
Reserves: 6 months; 9 over $1.5M; 12 over $2.5M. Cash-out can NOT be used for reserves.

Borrower & credit

Housing payment history: 0x30x12
Credit events (BK, foreclosure, short sale, modification): Bankruptcy, foreclosure, deed-in-lieu, pre-foreclosure, short sale, mortgage charge-off, lis pendens and notice of default all count as credit events and each requires at least 36 months of seasoning. Bankruptcy measured from discharge/dismissal; housing events from settlement; a foreclosure included in a bankruptcy runs from the earlier date. A notice of default is treated the same as a foreclosure (the former exception for a default cured with 12 on-time payments no longer applies). A charged-off second mortgage counts as a foreclosure from its charge-off date.
Forbearance, deferrals & modifications: Forbearance, modification, deferral or repayment plans on any property the borrower owns are acceptable once completed, with all related obligations satisfied and at least 3 consecutive on-time payments made as of the application date of the new loan. No 12-month seasoning period applies.
Collections, charge-offs, judgments & liens: For DSCR loans, collections and charge-offs can be ignored unless they affect title. All open judgments and involuntary liens must be paid at or before closing (no subordination). IRS installment plans OK with 2+ on-time payments and no recorded lien in the subject's county. Credit counseling OK after 12 on-time months.
Tradelines & credit depth: 2 tradelines reporting 24 months (active in last 12) or 3 reporting 12 months; waived if the borrower has three credit scores. Representative score is from the borrower/guarantor with the highest score.
First-time homebuyer: No
First-time investor: Not eligible; FTHB not eligible.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: LLC, partnership or corporation formed primarily to own, finance, lease or manage real estate; US-domiciled; up to 4 members/managers; up to two entity layers allowed. Applications from members/managers representing at least 25% cumulative ownership – their credit is used for qualifying and pricing – and each must sign a full-recourse personal guaranty or be individually obligated on the Note; the guarantor must have authority to sign for the entity. Power of attorney not allowed on entity-vested loans.
Gift funds & assets: Not allowed.
Financed property / exposure limits: Lender exposure to one borrower/household: $5M UPB or 10 loans.
Other borrower rules: US citizens, permanent and non-permanent residents; citizens/individuals from OFAC-sanctioned countries ineligible. Experienced investors only. Non-arm's-length transactions ineligible. The borrower and family can't occupy residential units (commercial units may be occupied by the borrower's business). IO may qualify on the ITIA payment.

Property

Eligible property types: 5–8 unit residential; 2–8 unit mixed use (retail/office/restaurant only)
ADUs & unpermitted additions: Not applicable – 5–8 unit residential and 2–8 unit mixed-use buildings.
Non-warrantable condo: Not applicable – condominium units are not an eligible property type on this program (5-8 unit residential and 2-8 unit mixed use only).
Condotel: Not eligible.
Rural / acreage: Rural not eligible; max 2 acres.
Minimum square footage: 400 sq ft per individual unit (2–8 units).
Mixed use: 2–8 units with retail/office/restaurant only: 1 commercial unit on 2–3 units, 2 on 4–5, 3 on 6–8; commercial space under 50% of building area; no vacant commercial space; no environmental uses (dry cleaners, laundromats).
5+ units / multi-property: 5–8 residential units allowed: $300K–$3M, commercial-style appraisal (71A/71B/1050 or narrative) with rent roll and income/expense statement, plus a commercial BPO or second appraisal. No fair/poor ratings, health/safety issues or structural deferred maintenance.
Ineligible properties: Manufactured/mobile homes, co-ops, timeshares and fractional ownership, boarding houses/B&B/PadSplit, healthcare/assisted-living use, properties with income-producing non-residential structures (billboards, cell towers, commercial workshops), agricultural features (vineyards, farms, ranches, orchards, equestrian), zoning violations or illegal use, domes, barndominiums, log homes not common to the area, houseboats, Native American reservation land, marijuana-related use, properties not accessible by standard roads or not suitable for year-round use, C5/C6 condition or Q6 quality, Hawaii lava zones 1–2 and coastal-erosion zones (Hawaii coastal properties subject to lender review), vacant land/land development, and unique properties with no comparable sales in the market. Also ineligible on this program: rural properties (only 5–8 unit residential or 2–8 unit mixed use qualify). Over 2 acres ineligible (no truncating). Leaseholds eligible where common.
Declining markets: Declining market (per appraisal or lender-designated state): max 75% purchase / 70% refinance and $2M loan (FN: 70% refi, $2M; 5–8/mixed use: no adjustment).
Appraisal, review & insurance: Commercial-style appraisal with full interior inspection and photos of all units: 5–8 residential on FHLMC 71A/71B, FNMA 1050 or similar (or narrative); mixed use on a general-purpose commercial form or narrative. Required attachments: rent roll, income/expense statement, photos, aerial, sketch or floor plan of all units, map, appraiser qualifications. Review: commercial sales-and-income BPO (commercial evaluation in PA and NC; if more than 10% below the appraisal, the BPO value is used) or a second appraisal (lower value used). Appraisal must be dated within 120 days of the Note (no recertification). Loans over $2M also need a second appraisal unless a Form 71A or commercial narrative report is used (lower value governs). No fair/poor ratings, environmental, health/safety or structural issues. Escrow holdbacks not purchased.

Rental income

Rent used on a purchase: Lower of market or lease, less management fee
Rent used on a refinance: Same as purchase: leased units at the lower of market or lease, less any management fee shown on the appraisal; copies of all existing leases required (month-to-month leases need the 2 most recent months' receipts); leases can't be with an interested party or family member.
Vacant / unleased refinance: Vacant units at 75% market; max 1 vacant (2-3 units) / 2 (4+); no vacant commercial
Short-term rental (Airbnb/VRBO): No
Short-term rental documentation: N/A
Short-term rental limits: Short-term rental income not eligible.

Refinance seasoning

Cash-out seasoning: Six months of ownership to use the current appraised value; under 6 months, value is limited to price plus documented improvements (except inherited or divorce-awarded property). Not eligible if there was a cash-out within the past 6 months, for land-contract payoffs, with a POA, or if proceeds go to personal debts/taxes/judgments. Paying delinquent taxes (60+ days) or refinancing a free-and-clear property counts as cash-out. Rate/term refinances seasoned 6 months or less are also valued at the lesser of the appraisal or price plus documented improvements (same inheritance/divorce exceptions). Investment properties listed for sale in the past 6 months are eligible for cash-out only with a prepayment penalty of at least 3 years (so only where a penalty is permitted).
Delayed financing (cash purchase recoup): Allowed for cash purchases within 6 months, treated as rate/term for pricing (cash-in-hand caps don't apply, except foreign nationals). Arm's-length purchase, documented funds, no liens; loan limited to documented investment, value capped at price plus improvements.
Recently listed for sale: For all refinances, value is the lower of the lowest list price in the prior 12 months or appraisal. Cash-out on an investment property listed within the past 6 months is allowed only with at least a 3-year prepayment penalty; any active listing must be cancelled before closing.

Other terms

Seller / interested-party concessions: Investment property: interested-party contributions up to 6%, for closing costs and prepaids only (never down payment or reserves). A borrower acting as their own agent may contribute commission within the limit. Excess reduces both price and value.
Secondary financing: Allowed if subordinated and included in CLTV (HELOCs counted at the full line amount unless past the draw period); no secondary financing from an interested party on purchases. The program's max LTV/CLTV limits apply.
State & local restrictions: Not available in IL or NY, Baltimore City MD, Philadelphia County PA, Puerto Rico, Guam or USVI. CT/NJ overlay: max 70% purchase / 65% refinance with 720 FICO. Texas: non-permanent residents connected to China, Russia, Iran or North Korea cannot finance investment property.

Additional details

Notes: Ineligible states: IL, NY. CT & NJ: max 70% purch / 65% refi, 720 FICO. Commercial BPO or 2nd appraisal required. No fair/poor condition or environmental issues.

← LAMD-D37 · All programs · LAMD-D39 →