LAMD-D38 DSCR 5–8 Units & Mixed Use | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 700
Max LTV – purchase: 75% (≤$1.5M)
Max LTV – rate/term refinance: 70%
Max LTV – cash-out refinance: 65%
Minimum loan amount: $300K
Maximum loan amount: $3.0M (5-8 res); $2.0M (mixed use)
Cash-out (cash in hand) limit: Max $1M.
LTV reductions & overlays: Max 75% purchase / 70% rate-term / 65% cash-out (720+ up to $1.5M), stepping down with loan size; 700 FICO max $2M. CT and NJ: 70% purchase / 65% refi with 720 FICO. No declining-market adjustment.

DSCR requirements

Minimum DSCR: 1.00
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Eligible rents ÷ PITIA (IO may use ITIA), minimum 1.00. Leased units at the lower of market or lease; vacant units at 75% of market (max 1 vacancy on 2–3 units, 2 on 4+), must be actively marketed. Rents reduced by any management fee on the appraisal. Commercial income capped at 49.99% of total.

Products & terms

Products: 15/30 fixed, 5/6 7/6 10/6 ARM
Interest-only: Yes
Prepayment penalty: Up to 5 yr; OH allowed on 3+ units
Reserves: 6 months; 9 over $1.5M; 12 over $2.5M. Cash-out can NOT be used for reserves.

Borrower & credit

Housing payment history: 0x30x12
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: No
First-time investor: Not eligible; FTHB not eligible.
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: Not allowed.
Financed property / exposure limits: Lender exposure to one borrower/household: $5M UPB or 10 loans.
Other borrower rules: N/A

Property

Eligible property types: 5–8 unit residential; 2–8 unit mixed use (retail/office/restaurant only)
ADUs & unpermitted additions: Not applicable – 5–8 unit residential and 2–8 unit mixed-use buildings.
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: N/A
Rural / acreage: Rural not eligible; max 2 acres.
Minimum square footage: N/A
Mixed use: 2–8 units with retail/office/restaurant only: 1 commercial unit on 2–3 units, 2 on 4–5, 3 on 6–8; commercial space under 50% of building area; no vacant commercial space; no environmental uses (dry cleaners, laundromats).
5+ units / multi-property: 5–8 residential units allowed: $300K–$3M, commercial-style appraisal (71A/71B/1050 or narrative) with rent roll and income/expense statement, plus a commercial BPO or second appraisal. No fair/poor ratings, health/safety issues or structural deferred maintenance.
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 market or lease, less management fee
Rent used on a refinance: Same
Vacant / unleased refinance: Vacant units at 75% market; max 1 vacant (2-3 units) / 2 (4+); no vacant commercial
Short-term rental (Airbnb/VRBO): No
Short-term rental documentation: N/A
Short-term rental limits: Short-term rental income not eligible.

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 IL or NY, Baltimore City, Philadelphia County or the territories. CT/NJ overlay applies.

Additional details

Notes: Ineligible states: IL, NY. CT & NJ: max 70% purch / 65% refi, 720 FICO. Commercial BPO or 2nd appraisal required. No fair/poor condition or environmental issues.

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