LAMD-D36 DSCR 5–8 Units | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 75% (DSCR ≥1.20, 720+, ≤$1.5M)
Max LTV – rate/term refinance: 75%
Max LTV – cash-out refinance: 70% (740/720, ≤$1M)
Minimum loan amount: $400K
Maximum loan amount: $2.5M
Cash-out (cash in hand) limit: $500,000 max.
LTV reductions & overlays: Grids by DSCR band (above 1.20, or 1.10–1.19) and loan size ($1M–$2.5M); cash-out as low as 50% at 680–699. Credit event 2–4 years old allowed only at 70% or less with 6 extra months of reserves.

DSCR requirements

Minimum DSCR: 1.10 (1.10–1.19 tier: 740+ only, 70% / CO 65%)
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum DSCR 1.10. Purchase: lower of current rent or market; vacant units at 90% of market. Refinance: lower of in-place lease or market with 2 months' receipts; undocumented or vacant units at 90% of market; no more than 35% of units vacant. IO qualifies on the IO payment.

Products & terms

Products: 5/6 ARM, 30yr fixed, IO versions
Interest-only: Yes – 10-yr IO options
Prepayment penalty: 5-year prepayment penalty required.
Reserves: 3 months up to $1M, 6 months to $2M, 9 months above; +6 months if a credit event is within 4 years.

Borrower & credit

Housing payment history: No more than 1x30x12 and 0x30x6. Rent-free not permitted.
Credit events (BK, foreclosure, short sale, modification): 4 years standard for bankruptcy, foreclosure, short sale/DIL; 2 years allowed at 70% LTV or less. COVID forbearance/deferral isn't derogatory if fully reinstated with 3 payments since, or 6 consecutive payments after exiting.
Forbearance, deferrals & modifications: Forbearance, loan modifications and deferrals are treated like a short sale / deed-in-lieu for eligibility and pricing (same seasoning as other credit events).
Collections, charge-offs, judgments & liens: Collections and charge-offs must be paid unless $1,000 or less, disputed, or past the statute of limitations – and any left open require extra reserves equal to the balance. Medical collections can stay open with no extra reserves. Liens/judgments that could attach to title must be paid before closing (cash-out can pay them); IRS installment plans with 6+ payments made and no recorded lien (or a subordinated lien) are OK.
Tradelines & credit depth: N/A
First-time homebuyer: Not published – ask us about your scenario
First-time investor: Not published – ask us about your scenario
Foreign national: No
ITIN borrower: No
Non-permanent resident: Allowed (E-1/2/3, EB-5, G, H-1, L-1, NATO, O-1, R-1, TN visas).
LLC / entity vesting: Individuals, tenants in common, joint tenants, revocable trusts, LLCs and corporations; max 4 borrowers/guarantors.
Gift funds & assets: Gifts for down payment and closing costs only (not reserves); no gift of equity. At 80% LTV or less no borrower contribution is required. Donors: relatives, domestic partners, fiancés, former relatives or godparents (no interested parties).
Financed property / exposure limits: Up to 20 financed properties; lender caps at 6 loans or $5M per borrower.
Other borrower rules: N/A

Property

Eligible property types: 5–8 unit residential
ADUs & unpermitted additions: Not applicable – 5–8 unit residential buildings.
Non-warrantable condo: N/A
Condotel: N/A
Rural / acreage: Rural properties are not permitted on investment loans (rural = appraiser designation or factors like under 25% built-up, agricultural zoning, dirt road, comps over 5 miles, population under 25,000, amenities over 25 miles, 10+ acre lots, large outbuildings).
Minimum square footage: Not published – ask us about your scenario
Mixed use: No
5+ units / multi-property: 5–8 residential units, $400K–$2.5M, commercial narrative appraisal plus a commercial desk review; second appraisal over $2M.
Ineligible properties: Over 20 acres (10 acres standard; up to 20 if typical with comps; no truncating), condotels (except the condotel program), community land trusts, co-ops, earth-berm and dome homes, deed-restricted communities, houseboats, log homes (unless typical with 3 local comps), manufactured and modular homes, mixed use, model leasebacks, operating farms/ranches/orchards, Hawaii lava zones 1–2, illegal zoning use, hazardous materials/noxious odors/safety violations, oil and gas leases, agricultural or commercial use, reservation land, non-conforming use that can't be rebuilt, timeshares, vacant land, sinkholes. Leaseholds eligible.
Declining markets: N/A
Appraisal, review & insurance: Second appraisal over $2M or on flips (lower value used); an enhanced desk review (ARR, CDA, or CU 2.5 or less) on every loan. Appraisals good 120 days, 180 with a recert.

Rental income

Rent used on a purchase: Lower of current rent or market; vacant units 90% market
Rent used on a refinance: Lower of lease or market with 2 mo receipt
Vacant / unleased refinance: Vacant units at 90% market; ≤35% units vacant on refi
Short-term rental (Airbnb/VRBO): No – long-term (12 mo) market rent only
Short-term rental documentation: N/A
Short-term rental limits: N/A

Refinance seasoning

Cash-out seasoning: Owned under 6 months (acquisition to note): LTV uses the lower of original purchase price or appraisal, including delayed financing. Refinancing a cash-out loan less than 12 months old counts as cash-out. Cash-out must be for business purposes with a letter of explanation; paying taxes 60+ days delinquent is cash-out.
Delayed financing (cash purchase recoup): Not published – ask us about your scenario
Recently listed for sale: N/A

Other terms

Seller / interested-party concessions: Interested-party contributions limited to 3% on investment properties.
Secondary financing: Rate/term may pay off a purchase-money second or a closed-end second seasoned 12 months (HELOCs drawn in the last 12 months not eligible). Any subordinate financing payment is included in the DSCR.
State & local restrictions: Prepayment penalty required on DSCR loans; where a state prohibits prepays, it must be bought out through pricing.

Additional details

Notes: Commercial narrative appraisal; 2nd appraisal >$2M. Business funds allowed. Assets seasoned 60 days.

← LAMD-D35 · All programs · LAMD-D37 →