LAMD-D42 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 680
Max LTV – purchase: N/A – stand-alone cash-out only
Max LTV – rate/term refinance: N/A
Max LTV – cash-out refinance: 80% CLTV (720, $50–350K); 75% (700); 70% (680)
Minimum loan amount: $50K
Maximum loan amount: $750K
Cash-out (cash in hand) limit: Per combined-lien caps: $2M → 90, $3M → 85, $3.5M → 80, $4M → 75, $5M → 60 CLTV
LTV reductions & overlays: Investment DSCR combined LTV: 75% at 700, 70% at 680 (to $350K). Combined lien balance caps: 90% to $2M, 85% to $3M, 80% to $3.5M, 75% to $4M, 60% to $5M. Declining market 70%. Warrantable condos and 2–4 units 75% on non-full-doc. Recent refinance within 6 months: 80%.

DSCR requirements

Minimum DSCR: 1.00
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum 1.00 at the note rate including first and second payments. Long-term rent = lower of lease or 1007 (lease required). STR accepted with 12 months of third-party rent documentation.

Products & terms

Products: 10/15/20/30yr fixed; 30/15 & 40/15 balloon ($200K min)
Interest-only: No (IO CES owner-occupied only)
Prepayment penalty: Minimum 1-year prepayment penalty required where allowed.
Reserves: None required on stand-alone CES

Borrower & credit

Housing payment history: 0x30x12 on all mortgages for all borrowers with a 12-month history.
Credit events (BK, foreclosure, short sale, modification): 48 months for foreclosure, short sale, deed-in-lieu or bankruptcy; no multiple events in 7 years.
Forbearance, deferrals & modifications: Forbearance with all payments made: reinstated, no waiting period. Missed payments: reinstated plus 3 on-time payments after forbearance (missed payments may have been added to the balance). Borrower explains the hardship.
Collections, charge-offs, judgments & liens: Open charge-offs/collections and medical collections under $1,000 each are OK; no delinquent accounts at closing.
Tradelines & credit depth: N/A
First-time homebuyer: No
First-time investor: Not eligible; non-permanent residents and foreign nationals not eligible for DSCR seconds.
Foreign national: No
ITIN borrower: No
Non-permanent resident: No
LLC / entity vesting: LLC, partnership or corporation vesting (program rules)
Gift funds & assets: N/A
Financed property / exposure limits: No limit on financed investment properties; lender exposure $7.5M or 10 properties per borrower; condo project exposure the lesser of $5M or 15%.
Other borrower rules: N/A

Property

Eligible property types: SFR (max 10 acres), PUD, warrantable condo (75%), 2-4 (75%)
ADUs & unpermitted additions: Follows first-lien ADU rules (permits not required if zoning compliance is legal; comps with ADUs).
Non-warrantable condo: Non-warrantable condos allowed with ONE non-warrantable factor: commercial space under 50% (subject unit fully residential), new projects 50% sold with common areas complete, HOA delinquencies up to 20%, developer control with defined turnover, reserves at least 5%, investor concentration up to 60% (higher with a rental history), single-entity ownership up to 50%, non-structural litigation case-by-case. Ineligible: timeshares/occupancy restrictions, live/work, manufactured projects, conversions under 2 years, over 50% non-residential, common-interest apartments, safety litigation. Borrower limited to 2 units (5–20 unit projects) or 10% of larger projects.
Condotel: Not eligible (SFR, PUD, warrantable condo, 2–4 units).
Rural / acreage: Rural only for primary residences; SFR max 10 acres.
Minimum square footage: 600 sq ft (1-unit); 500 sq ft condo
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Agricultural zoning (case-by-case), co-ops, Hawaii lava zones 1–2, hobby farms/income-producing acreage, houseboats, manufactured/mobile homes, multiple dwellings on one lot (legal ADUs OK), oil/gas leases (case-by-case), unique properties, working farms/ranches/orchards, room-and-board, assisted living. Single-unit minimum 600 sq ft; year-round use with permanent heat; deferred maintenance under $2,000; over 20 acres case-by-case.
Declining markets: 5% reduction to the maximum LTV.
Appraisal, review & insurance: Up to $400K: AVM (90% confidence) plus property condition inspection; full appraisal over $400K, for 2–4 units, or if AVM confidence is lower.

Rental income

Rent used on a purchase: N/A
Rent used on a refinance: Lower of lease or 1007; lease required
Vacant / unleased refinance: No – lease required for LTR
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: 12 months third-party rent documentation
Short-term rental limits: None stated

Refinance seasoning

Cash-out seasoning: More than 6 months of ownership required (DSCR is not a small full-doc loan).
Delayed financing (cash purchase recoup): N/A
Recently listed for sale: Properties listed for sale in the last 6 months are not eligible (120 days for small full-doc loans).

Other terms

Seller / interested-party concessions: Interested-party contributions up to 6% of the lower of price or value on investment properties, for closing costs/points only.
Secondary financing: Stand-alone closed-end second (cash-out only for DSCR). First lien can't be in active forbearance/deferment, negatively amortizing, a reverse mortgage, or have a balloon due during the second's term. First-lien ARMs with under 3 years fixed remaining qualify at fully indexed. IO firsts qualify on the amortized payment.
State & local restrictions: All states, except loans failing the NY subprime test; 2–4 unit DSCR under 0.75 not eligible in IL or NY. Florida foreign-national purchases subject to SB 264 restrictions (China, Russia, Iran, North Korea, Cuba, Venezuela, Syria).

Additional details

Notes: DSCR CES grid (CLTV): $50–350K 720 80 / 700 75 / 680 70; $350–500K 75/70/65; $500–750K 70/65/55. Declining market NOO max 70%. Listed for sale in last 6 mo ineligible. No forbearance, neg-am, reverse or early-balloon 1sts. Qualifies on lowest middle score of all borrowers.

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