LAMD-D07 DSCR Standard 0.75+ | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 640 (DSCR ≥1, ≤$500K)
Max LTV – purchase: 80% (720 ≤$1M; 700 ≤$1.5M)
Max LTV – rate/term refinance: 80%
Max LTV – cash-out refinance: 80% (720, ≤$1M); 75% (700)
Minimum loan amount: $100K
Maximum loan amount: $3.0M
Cash-out (cash in hand) limit: Unlimited at 65% LTV or less; up to $1M above 65%.
LTV reductions & overlays: Rural −5% (non-cumulative). Florida condos 75%. Non-arm's length 70%. Declining market −5% when above 70% LTV. Recently listed cash-out −10%. Property between tenants −10%. STR income capped at 75% LTV and DSCR 1.00+. DSCR 0.75–0.99: 70% purchase/rate-term, no cash-out, 660 FICO, up to $2M.

DSCR requirements

Minimum DSCR: 0.75
DSCR below 1.00: Yes – 0.75–0.99 (≤$2M): 660 → 70% purch/RT, CO N/A
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Monthly gross rent ÷ PITIA; interest-only uses the IO payment (all loans qualify at the initial payment). Purchase with an existing tenant: actual rent up to 110% of market, or up to 120% with 2 months' proof; new leases arranged by the buyer aren't allowed. Refinance: lower of market or lease; a higher lease up to 120% with 2 months' receipts; expired leases OK if clearly occupied; new leases (1 month collected) within 110% with deposit and first month traced, or up to 120% with supporting rent comps. STR income at 80%.

Products & terms

Products: 15/30/40 fixed, 30/40 fixed IO
Interest-only: Yes – 30/40yr with 10-yr IO
Prepayment penalty: Required options: 6 mo interest, fixed 5%, or step-down; state restrictions
Reserves: 3 months up to $1.5M, 6 months above $1.5M, 9 months above $2M; novice investors 6 months up to $2M. Loan proceeds can be used. 401(k) at 50%; crypto limited.

Borrower & credit

Housing payment history: Max 1x30x12 on the primary, the subject (refi) and any mortgage on credit; 0x30x12 required when DSCR is 0.80–0.99 or credit is under 660. Measured from the payment due date. Rent-free needs a property profile and LOE from the owner/lessee. A missed balloon maturity counts as a 1x30 if the lender kept accepting payments.
Credit events (BK, foreclosure, short sale, modification): 36 months for foreclosure, short sale or short refinance (mortgage charge-off), deed-in-lieu, any bankruptcy, or a modification. Modifications from a COVID forbearance plan and simple retention rate modifications have no restriction.
Forbearance, deferrals & modifications: COVID/natural-disaster forbearance: if payments continued, no restrictions; if payments were missed, either pay the loan current with verified funds or make 3 payments under a modification plan after exiting (third payment before the note date). Applies to primary residence and subject. COVID modifications/deferred balances aren't housing events.
Collections, charge-offs, judgments & liens: Consumer collections and charge-offs: no review or payoff required. All open judgments, garnishments and liens must be paid at or before closing – loan proceeds can be used only for liens tied to the subject (or as an accommodation if the borrower has liquid assets to cover them). Tax liens must be paid and removed from title.
Tradelines & credit depth: N/A
First-time homebuyer: No – must have owned real estate in last 36 mo
First-time investor: Novice investors (haven't owned an investment property 12 months in the last 36) allowed: 680 FICO, 6 months' reserves, STR only on refinances with actual income. First-time homebuyers (no real estate in 36 months) are not allowed, except when living in a spouse/partner-owned primary.
Foreign national: No
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: LLC, LLP or corporation (US-domiciled, purpose of real-estate acquisition); borrowers must own at least 25% combined; max 4 borrowers; personal guarantee at closing.
Gift funds & assets: Allowed after a 10% borrower contribution; donors must be immediate family, domestic partner or fiancé (not cousins). Not for reserves.
Financed property / exposure limits: No limit on properties owned. Lender exposure: 10 loans or $5M at DSCR 1.00+; 2 loans or $3M at DSCR 0.80–0.99; properties shouldn't be clustered in the same block, subdivision or project.
Other borrower rules: US citizens, permanent and non-permanent residents (visa with 6+ months remaining; non-standard status needs 2 years of US residency and credit). Foreign nationals not allowed. Family-member tenants make the loan ineligible. Builders/developers of the subject's 5+ unit project ineligible. Credit score = lowest middle score of all borrowers; tradelines 3x12, 2x24, or 8 tradelines with 8 years of history (waived with 3 scores).

Property

Eligible property types: SFR, PUD, 2-4, warrantable condo
ADUs & unpermitted additions: ADU rent counts when the appraisal shows the ADU is legal, allowed or zoning-compliant, with comps that have ADUs; multiple ADUs or a multi-unit with an ADU are fine as long as total units are 4 or fewer (refinance: ADU rent on the 1007). An ADU the appraiser calls illegal, not allowed or non-compliant makes the whole property ineligible. Unpermitted garage/porch conversions and room additions ARE acceptable: conversions aren't counted as living area (unless supported) and need a cost-to-cure; additions without permits (or unknown permit status) can count as living area at the appraiser's discretion; both need appraiser comments on workmanlike quality, no health/safety issues, and market acceptance.
Non-warrantable condo: Non-warrantable condos in established projects by exception only, with exception pricing. New condo projects need Fannie Mae CPM approval. Florida condos 75%. Master-policy deductibles up to 10% ($50K per unit).
Condotel: Not eligible.
Rural / acreage: Rural allowed with a 5% LTV reduction; long-term rent or actual earned STR only. Rural = appraiser says rural, or any 2 of: gravel road, all 3 comps over 5 miles, under 25% built-up. Max 10 acres. Any zoning is acceptable if the use is residential, residential is allowed, and it's the highest and best use.
Minimum square footage: No minimum, as long as size is common and supported by comps.
Mixed use: Not published – ask us about your scenario
5+ units / multi-property: No
Ineligible properties: Farms/ranches/orchards, B&Bs, boarding houses, condotels, co-ops, domes, TIC/fractional, group homes (assisted living, rehab), Hawaii lava zones 1–2, Native American land, houseboats, leaseholds, log homes, manufactured/mobile, mixed use, new condo projects without CPM, roads not meeting local standards, not year-round, marijuana cultivation, zoning violations, timeshares, vacant land, properties with incomplete renovations or significant deferred maintenance (open walls, missing flooring, empty pools).
Declining markets: N/A
Appraisal, review & insurance: Full appraisal plus a review product (CU 2.5 or less, CDA/ValREVIEW within 10%, field review or second appraisal). Second appraisal over $2M or on flips (price up 10% within 90 days or 20% within 91–180 days); lower value used. Escrow holdbacks not allowed.

Rental income

Rent used on a purchase: 1007/1025 market rent; existing leases staying (cap 120%); new buyer leases not allowed
Rent used on a refinance: Lower of 1007 or lease; lease up to 120% of 1007 with 2 mo receipts; new lease ≤110% (or ≤120% with comps) with paper trail
Vacant / unleased refinance: Property recently placed in service (acquired within 2 months, vacant for updates; DSCR 1.00+): 1007 rent if rent-ready and listed. Between tenants (vacant under 60 days, history of tenants, rentable condition): 1007 rent with 10% LTV reduction and 6 extra months of non-proceeds reserves.
Short-term rental (Airbnb/VRBO): Yes – DSCR ≥1.0, max 75%; purchase for experienced investors only
Short-term rental documentation: Requires a Property Guard (or similar) report showing the property can get an STR permit/license. Purchase (experienced investors only): STR rent on the 1007, an AirDNA Rentalizer (market/sub-market score 60+, or sub-market 50+ with demand/growth 60+; occupancy at least 40%, under 60% requires 9 months' reserves), or seller/property-manager rental data. Refinance: 12-month look-back from Airbnb-type statements; under 12 months OK if AirDNA supports the run rate.
Short-term rental limits: 80% of gross STR receipts; max 75% LTV; DSCR 1.00+; no DSCR 1.25+ pricing improvement; novice investors only on refinances using actual income.

Refinance seasoning

Cash-out seasoning: Only 3 months of ownership needed (acquisition to note) to use current appraised value; under 3 months only for inherited/awarded property or delayed financing. Time held in an LLC counts if the borrower owns 50%+. Cash-out must be for rental business purposes.
Delayed financing (cash purchase recoup): Allowed: LTV on the lower of appraisal or price plus documented improvements; show cash purchase (or a short-term loan of 24 months or less); funds sourced. Equity-withdrawal caps don't apply.
Recently listed for sale: By exception only, if listed within 6 months of application: listing cancelled before closing (MLS proof), 2-year prepay (or state max), value is the lower of lowest 12-month list price or appraisal, cash-out −10%, no vacancy (one vacant unit OK on 3–4 units), max pricing par.

Other terms

Seller / interested-party concessions: 6% at all LTVs; seller credits paired with a price increase are deducted from price for LTV.
Secondary financing: Rate/term can pay off a purchase-money second, or a non-purchase second/HELOC seasoned 12 months (HELOC draws under $5,000 in 12 months); an unseasoned second being paid counts toward the cash-out cap.
State & local restrictions: Not available in Baltimore City MD, Philadelphia County PA, or Kings, Rockland and Orange Counties NY; other NY loans only through delegated sellers. Prepayment penalties not allowed in AK, DC, KS, MI, MN, NM, RI, VT; IL and NJ only for C/S-corps; LA only 6-months-interest or flat 5%; OH only 3–4 units; PA only over about $329K.

Additional details

Notes: Not available: Baltimore City MD, Philadelphia County PA, Kings/Rockland/Orange County NY; NY non-delegated DSCR ineligible. Delayed financing: LTV on lower of value or cost+improvements; financing ≤24 mo term counts as cash purchase.

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