LAMD-D12 DSCR Standard (Two Credit Tiers) | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: Tier A 700 / Tier B 640
Max LTV – purchase: 80% (Tier A ≤$1.5M 700+ DSCR≥1; Tier B ≤$1.5M 720+)
Max LTV – rate/term refinance: 80%
Max LTV – cash-out refinance: 75%
Minimum loan amount: Tier A $100K (≤75 LTV) / $150K (>75); Tier B $125K / $200K
Maximum loan amount: Tier A $3.0M / Tier B $2.5M (DSCR>1.25, 740)
Cash-out (cash in hand) limit: Tier A: unlimited at 65% LTV or less; capped at $1M above 65%. Tier B: unlimited below 60% LTV; capped at $500K above 60%.
LTV reductions & overlays: Tier A: a 1x30x12 housing late or a credit event 36–48 months old caps LTV at 75%; non-warrantable condo 75%; condotel 75% purchase / 65% refi; declining market −5% when LTV is over 65%. Tier B: warrantable condo 75%; non-warrantable condo/condotel 75% purchase/rate-term, 70% cash-out; rural 75%. Recently listed cash-out: −5%.

DSCR requirements

Minimum DSCR: Tier A 0.80 / Tier B 0.75
DSCR below 1.00: Yes – Tier A 0.80+ (720, 75%); Tier B 0.75–0.99 (up to 75%)
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Gross rent ÷ PITIA (principal, interest, taxes, insurance, HOA). Interest-only loans qualify on the interest-only payment (ITIA) at the note rate. Landlord hazard policy required.

Products & terms

Products: Tier A: 30yr fixed, 30/40yr IO. Tier B: 15/30 fixed, 5/6 & 7/6 SOFR ARM, IO
Interest-only: Yes – Tier A min 700 FICO & DSCR 1.00; Tier B DSCR >1.00
Prepayment penalty: Up to 5 yr or state max
Reserves: Tier A: 3 months under $1M, 6 months $1M–$1.5M, 9 months above $1.5M. Tier B: 3 months for $125K–$500K at 70% LTV or less, otherwise 6 months. Cash-out proceeds can count as reserves.

Borrower & credit

Housing payment history: Tier A allows 1x30x12 (max 75% LTV); Tier B requires 0x30x12. Applies to the subject and the primary residence; all other mortgages on the credit report must be current. Renters must show an active lease; rent-free borrowers need a 12-month ownership/landlord history on another property and management review.
Credit events (BK, foreclosure, short sale, modification): Bankruptcy (Ch 7/11/13), foreclosure, short sale, deed-in-lieu, mortgage charge-off, pre-foreclosure, notice of default, a 120-day mortgage late, a default modification or a non-COVID forbearance all count. Tier A: 48+ months no restriction; 36–48 months capped at 75% LTV. Tier B: 36 months. Measured from discharge/completion to the note date. First-time investors need 48 months.
Forbearance, deferrals & modifications: A non-COVID/non-disaster forbearance, a notice of default, a 120-day mortgage late or a modification due to default all count as a credit event and must meet the credit-event seasoning. COVID or non-default modifications are not treated as credit events.
Collections, charge-offs, judgments & liens: Collections and non-mortgage charge-offs under $5,000 may stay open if they won't cloud title; larger ones can stay open with reserves covering the balance. Anything that can become a lien (judgments, tax liens, mechanic's liens, past-due property taxes) must be paid at or before closing, though an IRS/state tax-lien payment plan with 3 months of on-time payments and title sign-off can be allowed. Medical collections are ignored.
Tradelines & credit depth: N/A
First-time homebuyer: No
First-time investor: Allowed with DSCR above 1.00, 0x30x12 and 48-month credit-event seasoning; must currently own a primary or second home (or have sold one with a clean mortgage and current rental history). Tier B also needs 700 FICO; Tier A doesn't allow STR. First-time homebuyers (no ownership in 5 years) are ineligible.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: LLC or corporation (no partnerships), up to 4 owners, all natural persons, no layered entities, US-domiciled, unanimous consent, ownership unchanged in the 90 days before application, no power of attorney. Revocable trusts per Fannie Mae.
Gift funds & assets: Purchase only, with a 10% borrower contribution and DSCR of at least 1.00. Not for reserves; gifts of equity not allowed. Large deposits don't need to be sourced.
Financed property / exposure limits: Up to 20 financed properties per borrower (properties in a business name and not on the credit report don't count). Lender exposure capped at $7.5M or 10 loans per borrower.
Other borrower rules: Borrower must have a primary residence that's superior to the subject (or owned 1+ year); otherwise extra occupancy review. No power of attorney on entity or cash-out loans. Non-permanent residents eligible; ITIN and foreign nationals not on this program.

Property

Eligible property types: SFR, 2-4, PUD, warrantable & non-warrantable condo
ADUs & unpermitted additions: Permitted ADUs: long-term rent from the ADU can be added to the main dwelling's rent. Unpermitted ADUs/additions are acceptable on the property only if they meet Fannie Mae's rules (appraiser shows they're typical for the market, doesn't give them full value, and they're safe); no rent from an unpermitted unit counts. Manufactured/mobile homes are never acceptable as an ADU.
Non-warrantable condo: Allowed (full condo questionnaire). Non-warrantable features accepted: one entity owning up to 30% of units (21+ unit projects) or 4 units (5–20 units), commercial space up to 50%, presales down to 30%, HOA delinquencies up to 20% (60+ days), reserve allocation down to 3–7% if the reserve balance is strong, insurance deductibles up to 10%, mandatory outside memberships with 2 similar sales comps. Non-structural litigation, commercial-insurance exceptions and builder concessions over 1% may be approved case-by-case. Ineligible: condo conversions under 2 years old, live-work units, mandatory rental pools, projects that restrict owner occupancy, timeshare/segmented (Hawaii allows up to 20% timeshare units), manufactured-home projects. Max LTV: Tier A 75%; Tier B 75% purchase/rate-term, 70% cash-out.
Condotel: Allowed. Unit 500+ sq ft with a full kitchen (stove/oven), resort or metro area, no mandatory rental pool, no black-out dates, borrower must have exclusive use, no fractional ownership, borrower may own up to 20% of the project, 100% investor concentration OK in established projects, commercial space up to 50%. Tier A: 75% purchase / 65% refi, loan $150K–$1M, DSCR 1.00+. Tier B: 75% purchase/rate-term, 70% cash-out.
Rural / acreage: Rural allowed up to 20 acres (Tier B capped at 75% LTV). Primary use must be residential, no agricultural or income-producing use, interior photos of outbuildings, lot size typical for the area. Over 10 acres needs comparables with similar acreage. Agriculturally zoned is OK when the use is residential; Texas properties can't have mineral/drilling-rights exceptions.
Minimum square footage: Not published – ask us about your scenario
Mixed use: Not eligible on the DSCR grid.
5+ units / multi-property: No
Ineligible properties: Manufactured/mobile homes (including manufactured ADUs), co-ops, domes/geodesic and other unique homes, log and log-façade homes, houseboats, vacant land, 5+ units, blanket (multi-property) mortgages, boarding houses/PadSplit, B&Bs, timeshares/fractional, assisted living, working farms/ranches/orchards, C5/C6 condition, tribal-trust land, Hawaii lava zones 1–2, Puerto Rico/Guam/USVI, homes or units under 500 sq ft, any unit lacking a separate bedroom and a full kitchen with stove/oven (cooktop-only fails), properties not suitable for year-round occupancy, and STR-qualified properties where local code bans short-term rentals.
Declining markets: Declining market (per appraisal) reduces max LTV by 5%.
Appraisal, review & insurance: Full interior/exterior appraisal with 1007 (1-unit) or 1025 (2–4 units). Appraisal must be under 180 days old at note (update after 120). A second appraisal is required above $2M. Appraisal transfers not allowed on the domestic programs.

Rental income

Rent used on a purchase: Lower of the lease or market rent (1007/1025). A new lease must start within 60 days of closing; an existing tenant's lease must be transferred.
Rent used on a refinance: Market rent from 1007/1025, or the lease if higher with 3 months' proof of receipt of the higher rent (security deposit doesn't count). Month-to-month needs the latest rent receipt unless market rent is equal or higher. Family-member tenants are not allowed.
Vacant / unleased refinance: Allowed – use market rent with a letter of explanation.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Purchase: appraiser's short-term rent analysis, the seller's 12-month platform history, or an AirDNA/Opteon projection (12-month forecast, 50%+ occupancy, 5 comparable properties within the same ZIP or 5 miles, similar size/rooms/amenities; DSCR on projected revenue ÷ 12). Refinance: 12-month Airbnb/VRBO remittance average plus proof of an active listing; if not rented 12 months because recently bought or renovated, the appraiser/AirDNA projection may be used.
Short-term rental limits: Tier A: with remittance history DSCR 1.00 minimum; with a projection 1.25 at 75% LTV or less, 1.50 above 75%. Tier B: purchase 1.25 above 75% LTV, 1.00 otherwise; refinance 1.00. First-time investors: STR not allowed on Tier A.

Refinance seasoning

Cash-out seasoning: At least one borrower on title 6 months (except delayed financing). Cash-out within 12 months of a prior cash-out on the same property follows the guide's cash-out-to-cash-out rule. Properties inherited within 6 months, land-contract payoffs and non-arm's-length deals are ineligible.
Delayed financing (cash purchase recoup): Yes (as R/T)
Recently listed for sale: Properties currently listed are not eligible to refinance. If listed in the prior 6 months: rate/term needs the listing off-market before application plus at least a 1-year prepayment penalty (where state law allows); cash-out needs either 6 months off-market, or off-market at least 1 day before application with a 5% LTV reduction plus a 1-year prepay. Cancelled listing, current MLS search and a letter of intent are required.

Other terms

Seller / interested-party concessions: Seller/interested-party contributions up to 6% of price at any LTV. Excess contributions and any personal property (furniture, cars, etc.) are deducted from the sales price before LTV is calculated.
Secondary financing: Not allowed – no new or existing subordinate financing can remain on a DSCR loan.
State & local restrictions: All 50 states; Puerto Rico, Guam and USVI ineligible. California properties must qualify with taxes of at least 1.25% of the purchase price unless the actual rate is documented higher.

Additional details

Notes: Declining market −5% when LTV >65 (Tier A). Manually underwritten.

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