LAMD-D41 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 680
Max LTV – purchase: 65% CLTV (740 and 720 up to $750K; 700 up to $500K); 60% at 720 up to $1M and at 680 up to $500K.
Max LTV – rate/term refinance: 65% CLTV (740 and 720 up to $750K; 700 up to $500K); 60% at 720 up to $1M and at 680 up to $500K.
Max LTV – cash-out refinance: 60% CLTV; 55% at $1M (720)
Minimum loan amount: $150K
Maximum loan amount: $1.0M (720 FICO at 60% CLTV purchase/rate-term, 55% cash-out); $750K at 740, and at 720 above those levels; $500K at 700 and 680. The second must be at least 15% of the first mortgage, and the first and second combined can't exceed $3M.
Cash-out (cash in hand) limit: Not published – ask us about your scenario
LTV reductions & overlays: Combined LTV per the second-lien grid (max 65% CLTV); 1-unit properties only (warrantable condos allowed). Short-term rentals: 5% below the grid. Declining market: 5% below max for combined loans up to $2.5M, 10% below above $2.5M.

DSCR requirements

Minimum DSCR: 1.00 (STR 1.15)
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum 1.00 including the first mortgage payment; rents per the first-lien rules (lesser of lease or market; STR with 12-month statements).

Products & terms

Products: Closed-end second, 15- or 30-year term.
Interest-only: Not published – ask us about your scenario
Prepayment penalty: Not applicable (no PPP)
Reserves: 6 mo (≤$750K) / 9 mo (>$750K) PITIA of 1st + 2nd

Borrower & credit

Housing payment history: 0x30x24
Credit events (BK, foreclosure, short sale, modification): Any credit event including foreclosure within 5 years is ineligible.
Forbearance, deferrals & modifications: A modification resolving a COVID forbearance, or from a forbearance exit, isn't a credit event (3 on-time payments after the forbearance ended are needed). The first mortgage behind this second can't be in deferral or forbearance. Other forbearance situations: ask us.
Collections, charge-offs, judgments & liens: Collections/charge-offs may stay open only if each is under $2,500 and the total is under $10,000 with no title impact; otherwise paid at or before closing. Judgments and tax liens may stay open on a repayment plan with 6 months of on-time payments (subordinated if recorded against the property); otherwise paid at closing (cash-out can pay them). Disputed collections of $250 or less can stay; other disputed accounts with derogatory history in 2 years must be removed and credit re-pulled.
Tradelines & credit depth: Each applicant needs 3 tradelines and 24 months of credit history, with one active in the last 6 months and one seasoned 24 months (if spouses apply together only one must meet it; authorized-user accounts don't count).
First-time homebuyer: Not allowed on the program
First-time investor: 12-month landlord history required unless LTV is 70% or less with DSCR above 1.00. Applicants must own a primary or investment property (can be waived if not a first-time homebuyer).
Foreign national: No – foreign nationals are ineligible.
ITIN borrower: Not published – ask us about your scenario
Non-permanent resident: No – non-permanent residents and EAD card holders are ineligible.
LLC / entity vesting: LLC (US) – all applicants sign individually; partnerships/corps
Gift funds & assets: Not published. Ask us about your scenario.
Financed property / exposure limits: 8 loans / $10M per borrower across first- and second-lien programs; no more than 10% of a PUD/condo project (1 unit if 10 or fewer units; 20% max concentration in any Florida condo project).
Other borrower rules: Qualifying score is the lowest middle score; for entity loans, the middle score of the largest owner/guarantor over 25%. Non-occupant co-borrowers not allowed. Ineligible: irrevocable trusts, diplomatic immunity, owners of federally illegal businesses (exception only), mortgage professionals, non-permanent residents, EAD holders and foreign nationals. Non-arm's-length purchases not allowed. Power of attorney not allowed on cash-out or entity/trust-vested loans.

Property

Eligible property types: 1-unit attached/detached, PUD, warrantable condo (max 80%); 2-4 units ineligible
ADUs & unpermitted additions: Multiple ADUs allowed if the appraiser states they're legally permitted and rentable with like-kind comps; ADU rent only if legal and legally rentable per the building department.
Non-warrantable condo: Not eligible (warrantable only).
Condotel: Not eligible.
Rural / acreage: Rural not eligible; agriculturally zoned not eligible; max 5 acres for DSCR.
Minimum square footage: 500 sq ft
Mixed use: Case-by-case.
5+ units / multi-property: No
Ineligible properties: Over 5 acres, agricultural zoning, hobby farms, income-producing acreage, 2–4 units and 5+ units, rural, manufactured/mobile, modular, oil/gas leases, unique properties, working farms, co-ops, condotels, non-warrantable condos, C5/C6 condition, condo conversions not meeting Fannie Mae, raw land, commercial, earth-berm homes, environmental conditions, lagoons/cesspools, places of worship, timeshares, boarding houses, assisted living, reservation land, houseboats, fractional ownership, marijuana use, TICs, model leasebacks, private transfer fees, under 500 sq ft, ADUs that don't meet the legal/rentable requirements, land contracts. Log homes and mixed use are case-by-case.
Declining markets: 5% below the maximum CLTV for combined first and second loans up to $2.5M; 10% below above $2.5M; plus credit-risk review.
Appraisal, review & insurance: One full appraisal on all loan amounts, good for 120 days (recertification to 180). All appraisals reviewed with a CDA (CU score of 2.5 or less may substitute except on combined loans over $1.5M up to $3M). Unpermitted additions case-by-case: appraiser must confirm workmanlike quality and no adverse marketability impact, and the addition gets no value. Declining market: 5% below max CLTV up to $2.5M combined, 10% below above $2.5M, with credit-risk review. Escrow holdbacks up to 30 days/$25K on purchases (case-by-case).

Rental income

Rent used on a purchase: 100% market if vacant; lesser of lease or market
Rent used on a refinance: Lesser of lease or market; higher lease if 6+ mo remaining & 2 mo receipts; below-market leases can use market with intent letter
Vacant / unleased refinance: 90% of market rent if renovated within 6 mo & listed; seasoned investors without renovation: lesser of 65% or grid −5%
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: 12-mo income statement (not borrower generated) + listing + market/municipal proof; purchase uses lesser of 12-mo or 90% AirDNA/NAN; refi 25% vacancy factor, ≤10% decline
Short-term rental limits: DSCR 1.15; max CLTV 5% below grid

Refinance seasoning

Cash-out seasoning: 6 months ownership/title seasoning
Delayed financing (cash purchase recoup): N/A
Recently listed for sale: Not eligible if the property was listed for sale in the last 12 months.

Other terms

Seller / interested-party concessions: Interested-party/financing contributions up to 6% at any LTV, limited to actual closing costs and prepaids.
Secondary financing: Second lien behind an institutional first. The first can't be in deferral/forbearance, negative-amortizing, a reverse mortgage, private, or have a balloon due during the second's term.
State & local restrictions: N/A

Additional details

Notes: Senior lien must be institutional; no forbearance, neg-am, reverse, private or early-balloon 1sts.

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