LAMD-D06 DSCR Standard (Below 1.00 Allowed) | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 640 (DSCR ≥1) / 660 (DSCR <1)
Max LTV – purchase: 80% (700, ≤$1.5M)
Max LTV – rate/term refinance: 80%
Max LTV – cash-out refinance: 75% (700, ≤$1.5M)
Minimum loan amount: $100K (<$150K: 70% purch / 65% refi, DSCR 1.25)
Maximum loan amount: $3.5M
Cash-out (cash in hand) limit: $500K above 65% LTV; $1M below 65% (total equity withdrawn).
LTV reductions & overlays: 2–4 units and condos 75% purchase / 70% refi. Condotel 75% / 65%, max $1.5M. Rural 75% / 70%. 0x60x12 housing: 70% purchase / 65% refi. Credit event 24–35 months: 75% / 70%. Vacant or unleased refinance: 70%. Short-term rental: 75% purchase / 70% refi. Interest-only: 75% (70% cash-out), 680 FICO. Loans under $150K: 70% purchase / 65% refi with DSCR 1.25+. Declining market and CT/IL/NJ/NY: 75% / 70%, $2M max.

DSCR requirements

Minimum DSCR: No stated floor in <1.00 grid
DSCR below 1.00: Yes – <1.00: 700 → 75% purch/RT, 70% CO (≤$1.5M); 680 → 70% purch/RT, no CO
No-ratio (no DSCR calculated): Yes (<1.00 grid has no floor)
How DSCR and qualifying rent are calculated: Monthly gross rent ÷ PITIA (or ITIA on IO), each unit evaluated separately. Long-term: lower of lease or market needs nothing more; a higher lease is usable with 2 months' receipts but capped at 120% of market; a higher market rent is usable but capped at 120% of the lease. Rent-controlled/subsidized units use contract rent. Short-term: 12-month average, reduced by at least 20% for expenses (actual expenses if higher), lowest source used when there are several.

Products & terms

Products: 15/30/40 fixed, 5/6 7/6 10/6 ARM (30 & 40yr; 40yr ARM must be IO)
Interest-only: Yes – 680 FICO; 75% purch/RT, 70% CO
Prepayment penalty: Up to 5 yr; not in AK, MI, NM, OH; IL & NJ only if entity-vested; MS declining only; PA base-figure limit
Reserves: 2 months; 6 months over $1.5M; 12 months over $2.5M. Cash-out counts.

Borrower & credit

Housing payment history: 1x30x12 with no reduction; 0x60x12 allowed at 70% purchase / 65% refi. Verified on the primary residence and the subject (refi); other mortgages on credit count. Free-and-clear primary needs a property profile.
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. 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 as a 1x90x12 unless cured with 12 on-time payments. A charged-off second mortgage counts as a foreclosure from its charge-off date.
Forbearance, deferrals & modifications: Forbearance, modifications and deferrals completed or reinstated more than 12 months before the note date are fine (normal housing-history rules apply). If completed within 12 months, they are not eligible on any of the DSCR programs.
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: Not published – ask us about your scenario
First-time investor: Allowed: 700 FICO, 36 months since any credit event, 1-unit only, DSCR above 1.00, must own a primary residence (FTHBs living in a spouse-owned home may qualify). First-time homebuyers not allowed.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: LLC, partnership or corporation limited to owning/managing real estate; US-domiciled; up to 4 members/managers; up to two entity layers allowed. Personal guaranties from members totaling at least 25% ownership, each completing an application – their credit is used for qualifying and pricing.
Gift funds & assets: Allowed after a 10% borrower contribution.
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. Non-arm's-length transactions ineligible. Interest-only qualifies on the IO payment.

Property

Eligible property types: SFR, 2-4, condo, condotel, rural
ADUs & unpermitted additions: A single-family home may have up to two ADUs (three or more not allowed). Each ADU must be smaller than the main house with its own entrance, kitchen (cabinets, counter, sink, stove), sleeping area and bathroom; space reachable only through the main house isn't an ADU. An ADU that isn't allowed under zoning does NOT make the property ineligible if hazard insurance covers it, the use is common in the neighborhood, and the appraiser shows two comparable sales with the same non-compliant use – but its rent can't be counted. ADU rent counts only when the appraisal shows zoning is legal (permits verified where required) and at least one comp has the same number of ADUs; long-term ADU rent is the lower of market rent or actual rent. Two ADUs require a 1025.
Non-warrantable condo: Condos are reviewed under the lender's own project rules rather than a warrantable/non-warrantable split: unit 500+ sq ft with a full kitchen and a bedroom, commercial space up to 50%, HOA delinquencies up to 20%, single-entity ownership up to 20% (5+ units), investor concentration up to 60% (higher possible with a rental history), non-structural litigation with damages under 25% of reserves. Established projects need 90% sold, 40% owner-occupied and HOA turned over; new projects 50% sold and 50% owner-occupied. Projects with critical repairs, unremediated special assessments, or safety violations are ineligible. Site condos use single-family LTVs. Lender project exposure: lesser of $5M or 20% of units.
Condotel: Allowed: 75% purchase / 65% refi, max $1.5M; unit 500+ sq ft, full kitchen, separate bedroom; investor concentration up to 100%; rents reduced 10%. Owner self-managing as an STR doesn't by itself make it a condotel.
Rural / acreage: Rural allowed at 75% purchase / 70% refi; max 5 acres on this program. Rural = appraiser says rural, or unpaved road plus 2 of 3 comps over 5 miles away.
Minimum square footage: SFR 700; 2-4 400/unit; condo 500
Mixed use: No
5+ units / multi-property: No
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. Over 20 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: Full interior/exterior appraisal plus review product (or second appraisal); second appraisal required over $2M and on HPML flips (price up 10% within 90 days or 20% within 91–180 days of the seller's purchase). Transferred appraisals accepted. Escrow holdbacks not purchased.

Rental income

Rent used on a purchase: Lower of lease or 1007; higher of either allowed within 120% (lease needs 2 mo receipt); vacant OK without LTV hit
Rent used on a refinance: Original appraisal showing tenant-occupied, 1007/1025 and the lease (month-to-month OK). No lease provided: max 70%. Lease/market 120% caps apply. Leases can't be with an interested party or family member.
Vacant / unleased refinance: Allowed at the lesser of 70% or the grid. Vacant purchases have no LTV restriction.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Must meet local ordinances. Any of: appraiser STR analysis (data source, comps, daily rate, occupancy, seasonality), 12-month property-manager statement (net of fees), 12 months of bank statements with rental records, or an AirDNA Rentalizer (purchase only, 12-month forecast within 90 days, 3 default comps, minus 20%).
Short-term rental limits: Lesser of 75% purchase / 70% refinance or the grid; 20% expense haircut; condotel rents reduced 10%.

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.
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: Not permitted on the DSCR programs (closed-end seconds are a separate product).
State & local restrictions: Not available in Baltimore City MD, Philadelphia County PA, Puerto Rico, Guam or USVI. 2–4 units not eligible in IL and NY. CT, IL, NJ, NY overlay: max 75% purchase / 70% refi and $2M (FN: 70% refi, $2M). Prepayment penalties not allowed in AK, MI, NM, OH; in IL and NJ only for entity borrowers; PA not on 1–2 units at or below about $329K; MS declining only.

Additional details

Notes: Not available Baltimore City, Philadelphia County, PR/Guam/USVI. IL & NY: 2-4 unit ineligible. CT/IL/NJ/NY and declining markets: max 75% purch / 70% refi, $2M. Non-arm's-length ineligible.

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