LAMD-D44 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 700 (no borrower mid-score <660); highest mid-score qualifies
Max LTV – purchase: N/A – concurrent closing ineligible
Max LTV – rate/term refinance: 75% CLTV (720) / 70% (700)
Max LTV – cash-out refinance: 75% CLTV (720) / 70% (700)
Minimum loan amount: $100K
Maximum loan amount: $350K; combined $3.5M
Cash-out (cash in hand) limit: No separate cash-in-hand cap; limited by max CLTV (75% at 720+, 70% at 700).
LTV reductions & overlays: Combined LTV: 75% at 720+, 70% at 700 ($100K–$350K). 3–4 units 65%. Declining market 70%. Listed for sale 6–12 months ago with a prepay 70%. Inherited/non-purchase acquisitions 60%.

DSCR requirements

Minimum DSCR: 1.00 – lease required
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum 1.00 including both first and second liens; a lease must be in place (standard rent rules).

Products & terms

Products: 10/15/20/30yr fixed, fully amortizing
Interest-only: No
Prepayment penalty: Investment only
Reserves: Rate/term: 3 months of combined first and second lien PITIA. Cash-out: plan on 6 months (cash-out proceeds can count) – ask us to confirm.

Borrower & credit

Housing payment history: 0x30x12 with a 12-month housing history.
Credit events (BK, foreclosure, short sale, modification): 4 years for short sale, foreclosure, DIL, default modification, NOD, 120+ day late or a single bankruptcy; multiple events ineligible.
Forbearance, deferrals & modifications: Existing first lien can't be in active forbearance or deferment. A prior natural-disaster or hardship forbearance on the first lien is eligible only if seasoned 12+ months and the deferred balance is included in CLTV. Other properties: the primary residence can't be in forbearance; one other REO in forbearance is OK; a completed forbearance on the primary needs 2 payments since (rate/term) or 6 (cash-out).
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: No separate rule; general first-time investor limits (DSCR 1.00+, 680+ FICO) are already within this program's 1.00 DSCR and 700 FICO minimums.
Foreign national: No
ITIN borrower: No
Non-permanent resident: No
LLC / entity vesting: LLC vesting allowed if the borrower(s) own at least 25%, documented by the entity documents. No vesting changes (except removing a co-borrower or adding one whose income isn't used). If the first lien closed in an entity, a guaranty and entity documents are required. No POA.
Gift funds & assets: Not applicable – refinance-only program (no purchases, no gifts of equity). Gift funds can't be used for reserves.
Financed property / exposure limits: Up to 20 financed residential properties; lender exposure $5M or 10 loans per borrower/guarantor; 3+ loans in one complex or subdivision case-by-case.
Other borrower rules: US citizens, permanent residents and inter vivos revocable trusts; non-occupant co-borrowers only if also on the first lien. Ineligible: non-permanent residents, DACA, asylum applicants, ITIN, foreign nationals, borrowers without a valid SSN, active litigation or pending separation/divorce, diplomatic immunity, irrevocable/land/blind trusts, retirement-vehicle vesting, GSE/HUD exclusion lists; no POA signing. No vesting changes except removing a co-borrower or adding one whose income isn't used. Business-purpose affidavit required. DSCR minimum FICO 700 (no borrower under 660).

Property

Eligible property types: SFR, 2-4, PUD, townhome, warrantable condo
ADUs & unpermitted additions: Follows the first-lien DSCR rules (permitted ADU rent with comps and lease; unpermitted ADUs acceptable but no rent).
Non-warrantable condo: Warrantable condos only.
Condotel: Not eligible.
Rural / acreage: Rural ineligible; max 2 acres.
Minimum square footage: 500 sq ft per unit (program rules)
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: Maximum 70% CLTV in declining markets.
Appraisal, review & insurance: Up to $400K: AVM with 90% confidence plus a property condition inspection (full appraisal if confidence is lower or HPML); over $400K full appraisal. No desk review needed.

Rental income

Rent used on a purchase: N/A
Rent used on a refinance: Lease required. Lesser of lease or market rent (1007/1025); a lease above market can be used up to 120% of market with the latest 3 months' receipts; 2–4 units unit by unit.
Vacant / unleased refinance: Not eligible – lease required
Short-term rental (Airbnb/VRBO): No
Short-term rental documentation: N/A
Short-term rental limits: Short-term rentals ineligible.

Refinance seasoning

Cash-out seasoning: Owned at least 6 months; paying off an existing second requires 12 months of seasoning.
Delayed financing (cash purchase recoup): Not available – the borrower must have owned the property at least 6 months, and the existing first lien must be seasoned 6+ months.
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. Rate/term without a prepay: not permitted within 6 months, pre-approval for 6–12 months; with at least a 2-year prepay: permitted. Cash-out without a prepay: not permitted within 6 months (70% max with pre-approval at 6–12 months); with a 2-year prepay: 70% max.

Other terms

Seller / interested-party concessions: Not applicable – refinance-only program.
Secondary financing: Closed-end second behind an existing first (no third-position subordinations). Ineligible firsts: seasoned under 6 months, ARMs (unless qualified at the life-cap payment and can't adjust for 36 months), balloons, HELOCs, original amortization over 40 years, active forbearance/deferment (prior forbearance OK if seasoned 12+ months and included in CLTV), fixed-rate IO with under 5 years of IO left, negative amortization, open renovations, private-party, PACE (unless paid off at closing), reverse mortgages.
State & local restrictions: Texas 50(a)(6) ineligible.

Additional details

Notes: Declining market 70%; 3-4 unit 65%; inherited/non-purchase acquisitions 60%; listed for sale 6–12 mo ago w/ PPP 70%. TX 50(a)(6) ineligible. 1st lien must be seasoned ≥6 mo; no HELOC, balloon or private-party 1sts.

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