LAMD-D20 DSCR Standard 0.75+ & No-Ratio | DSCR Guidelines

Loan limits

Lien position: First lien
Minimum credit score: 660
Max LTV – purchase: 80% (DSCR ≥1, 720, ≤$1M)
Max LTV – rate/term refinance: 80%
Max LTV – cash-out refinance: 75% (DSCR ≥1, 720)
Minimum loan amount: $125K
Maximum loan amount: $2.0M
Cash-out (cash in hand) limit: >60 LTV max $500K; ≤60 unlimited
LTV reductions & overlays: 2–4 units, warrantable condos and non-warrantable condos each capped at 75%. Short-term rental income: 70% and DSCR 1.00+. Interest-only: 75% (DSCR 1.00+) or 70% (DSCR 0.75–0.99). Non-permanent residents: 75%, no cash-out. Declining market (either appraiser): 5 points off the most restrictive applicable max.

DSCR requirements

Minimum DSCR: 0.75 or no ratio
DSCR below 1.00: Yes – ≥0.75: max 75% purch/RT (700), 70% CO (720)
No-ratio (no DSCR calculated): Yes – max 75% (740), CO 65%
How DSCR and qualifying rent are calculated: Gross rent ÷ qualifying payment (P&I on the amortizing term at the note rate plus taxes, insurance and dues). IO uses the interest-only payment. Solar lease/loan payments are added to the payment. No-ratio option needs no DSCR at all (no IO on no-ratio). DSCR 0.75–0.99 allowed at reduced LTVs.

Products & terms

Products: 15/30 fixed, 30/40 fixed IO, 5/6 7/6 10/6 ARM
Interest-only: Yes – 700 FICO; 75% (DSCR≥1) / 70% (≥0.75); not for no-ratio
Prepayment penalty: Allowed where legal; not in AK, MD, MI, MN, NM; limits IL, NJ, OH, PA, MS, RI
Reserves: Subject property only: 3 months up to $500K, 6 months $500K–$2M (PITIA, or ITIA for IO). Cash-out proceeds can count.

Borrower & credit

Housing payment history: 0x30x12 on the subject and every borrower's/guarantor's primary residence (whether or not they're on the note or title), via credit report, VOM/VOR, cancelled checks or bank debits; private or non-institutional VOMs/VORs also need 6 months of payment proof. Other mortgages on credit must be 0x30x12. Rolling lates count individually. Primary can be free and clear. Rent-free as a dependent with family OK with a rent-free letter.
Credit events (BK, foreclosure, short sale, modification): 36 months for foreclosure, short sale, pre-foreclosure or deed-in-lieu (from completion), Ch 7/11/13 bankruptcy (from discharge/dismissal), a default modification (from signing), a notice of default or lis pendens, a 120+ day mortgage late (from when brought current), or a balloon paid 180+ days late. A charged-off second mortgage counts from the charge-off date. Multiple bankruptcies are not allowed. Timeshare foreclosures are treated as consumer debt, not a credit event.
Forbearance, deferrals & modifications: Payments missed during any forbearance are counted as late payments, so the housing history must still be 0x30x12. A modification due to default needs 36 months.
Collections, charge-offs, judgments & liens: Collections/charge-offs in the last 3 years over $5,000 (individually or combined) must be paid; medical collections under $15,000 are excused. Judgments, garnishments and title liens must be paid. Income-tax liens must be paid unless on an IRS plan that is current and not liened. Past-due accounts brought current. Borrowers in credit counseling/debt management are ineligible. Any 60-day consumer late in the last 4 years must be explained.
Tradelines & credit depth: N/A
First-time homebuyer: No
First-time investor: Allowed with 700+ FICO and DSCR 1.00+ – no exceptions. Experience = 12 months owning/managing income property within the last 36 months, shown on the REO schedule. First-time homebuyers are ineligible (no borrower or guarantor can be one).
Foreign national: No
ITIN borrower: No
Non-permanent resident: Allowed at 75% max, no cash-out. Needs SSN and US credit; visas E-1/E-2/E-3, EB-5, G-1–G-5, H-1B, L-1, NATO, O-1, R-1, TN. No asylum status.
LLC / entity vesting: LLC, LP, GP or corporation formed for real-estate ownership; up to 4 owners. Guarantors must be a managing member or majority owner with 25%+ and are fully underwritten; all borrowers give personal recourse. Up to two entity layers allowed if the ownership chain is clean (no trusts in the chain). Spousal consent in community-property states (incl. CA). No POA for entities.
Gift funds & assets: Purchase only, from family, not above 80% LTV. 100% gift allowed under 75% LTV; at 75%+ the borrower must put in 5% of their own. No gift of equity. Not for reserves. Crypto, foreign assets (60 days seasoned) and 1031 funds (not reserves) acceptable.
Financed property / exposure limits: Up to 20 financed 1–4 unit properties per borrower/guarantor; lender caps its own servicing at 10 loans or $7.5M.
Other borrower rules: Professional investors and first-time investors only; max 4 borrowers. Foreign nationals, FTHBs, irrevocable/land/blind trusts, non-profits and asylum-status borrowers ineligible. Non-arm's-length purchases (family sales, estates, employer sales) ineligible. Limited POA allowed except cash-out and entities.

Property

Eligible property types: SFR, PUD, 2-4, warrantable & non-warrantable condo, leasehold
ADUs & unpermitted additions: One legal ADU on a single-family home is acceptable (Fannie Mae ADU rules apply; 2–4 units can't have ADUs). Multiple dwellings on one lot beyond one legal ADU are ineligible. Unpermitted additions and alterations are judged under Fannie Mae rules – generally acceptable when the appraiser shows the work is typical for the market and safe, without full value credit – rather than an automatic decline. Zoning must be legal (legal non-conforming must be 100% rebuildable).
Non-warrantable condo: Allowed at 75% with full project review; no stacking of non-warrantable features. Limits: single-entity ownership 30%, commercial space 49%, investor concentration 70%, HOA delinquencies 25% (60+ days, including special assessments), reserves 10%, common areas 100% complete, no mandatory dues or first-refusal rights. Developer-controlled HOAs case-by-case. Litigation OK only if non-structural, not affecting marketability, and damages under 25% of reserves or covered by insurance. Florida 3+ story buildings 30+ years old (25 near the coast) need completed SB-4D inspections, repairs and reserve study.
Condotel: Not eligible (also ineligible: timeshare units, live/work condos, projects with rental registration services or limits on owner occupancy).
Rural / acreage: Rural and agricultural-zoned properties are case-by-case with exception approval and a pricing adjustment. Over 20.00 acres is ineligible (no truncating). Working farms ineligible.
Minimum square footage: Single-family homes under 700 sq ft are ineligible.
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Manufactured/mobile homes, co-ops, condotels, fractional ownership, mixed use (daycare, doctor's office, etc.), 5+ units, commercial/industrial zoning, zoning violations, under construction, mandatory country-club memberships, boarding houses/B&B/SRO, group or healthcare homes, domes, earth-berm homes, log homes, houseboats, barndominiums, theme-park resort properties, builder model leasebacks, Native American/Hawaiian Home Lands, Hawaii lava zones 1–2, C6 condition, marijuana-related use, PACE/HERO-encumbered homes unless paid off. Leaseholds are eligible.
Declining markets: N/A
Appraisal, review & insurance: One full appraisal up to $2M (two above $2M or on HPML flips, lower value used) plus CU/LCA 2.5 or less or a desk review within 10%. Flips: second appraisal if price rose 10% within 90 days or 20% within 180 days. Rent-loss insurance of 6 months required; max deductible 5%.

Rental income

Rent used on a purchase: Lower of the lease or 1007/1025 market rent; no lease needed if none is being transferred. Purchase can be vacant.
Rent used on a refinance: Lower of lease or market rent; a higher lease is usable with 3 consecutive months of receipts.
Vacant / unleased refinance: Not eligible unless the property was just renovated to be rented and the appraiser confirms the completed work with photos – then market rent is used.
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: Must be legal and common for the area. Purchase: 100% of the appraiser's STR market rent (1007/1025 or a supplemental form from the same appraiser). Refinance: lower of the appraiser's STR estimate or the full 12-month actual history from Airbnb/VRBO/a property manager (12 months required).
Short-term rental limits: Max 70% LTV; minimum DSCR 1.00.

Refinance seasoning

Cash-out seasoning: 6 months of ownership (acquisition to note). Refinancing a loan that gave cash-out less than 12 months ago counts as cash-out. Paying delinquent taxes (60+ days) or PACE loans counts as cash-out. Inherited or divorce-awarded property has no seasoning (buyout agreement, probate cleared). No POA on cash-out. Cash-out can't fund renovations that make the property uninhabitable.
Delayed financing (cash purchase recoup): Allowed within 180 days of a cash purchase (arm's length, funds documented, no liens); priced as cash-out, LTV on the lower of appraisal or price plus documented improvements, loan capped at the documented investment.
Recently listed for sale: If listed within 6 months of the note date, the listing must be cancelled before application with a signed explanation. Multiple listings within 12 months are ineligible.

Other terms

Seller / interested-party concessions: Interested-party contributions up to 6%. A borrower acting as their own agent counts toward the limit. Lender/broker employees can't be a party to the loan.
Secondary financing: Not permitted (new or existing). A rate/term refi can pay off a purchase-money second or a HELOC with under $5,000 drawn in 12 months.
State & local restrictions: Prepayment penalties not allowed in AK, MD, MI, MN, NM; IL only for entity borrowers (Cook County over $250K); NJ only for S/C-corps; OH not on 1–2 units; PA not on 1–2 units under about $320K; MS must be declining; RI needs written consent. New-construction tax estimate 1.25% in CA, 1.5% elsewhere.

Additional details

Notes: Rent loss insurance 6 mo required. Non-arm's-length ineligible. Declining market −5%. Escrow waivers eligible.

← LAMD-D19 · All programs · LAMD-D21 →