LAMD-D41 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 680
Max LTV – purchase: 65% CLTV (740/720/700, ≤$750K)
Max LTV – rate/term refinance: 65% CLTV (740/720/700, ≤$750K); 60% at $1M (720) and 680
Max LTV – cash-out refinance: 60% CLTV; 55% at $1M (720)
Minimum loan amount: $150K
Maximum loan amount: $1.0M (720+); $750K (740); $500K (700/680)
Cash-out (cash in hand) limit: Not published – ask us about your scenario
LTV reductions & overlays: Combined LTV per the second-lien grid; warrantable condos 80%; 1-unit properties only.

DSCR requirements

Minimum DSCR: 1.00 (STR 1.15)
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum 1.00 including the first mortgage payment; rents per the first-lien rules (lesser of lease or market; STR with 12-month statements).

Products & terms

Products: Closed-end second
Interest-only: Not published – ask us about your scenario
Prepayment penalty: Not applicable (no PPP)
Reserves: 6 mo (≤$750K) / 9 mo (>$750K) PITIA of 1st + 2nd

Borrower & credit

Housing payment history: 0x30x24
Credit events (BK, foreclosure, short sale, modification): Any credit event including foreclosure within 5 years is ineligible.
Forbearance, deferrals & modifications: Mortgage forbearance: if all payments were made, the loan just needs to be reinstated (no wait); if payments were missed, 3 on-time payments after forbearance ended (missed payments may have been added to the balance). A modification resolving a COVID forbearance, or from a forbearance exit, isn't a credit event. Non-mortgage accounts may stay in forbearance with the payment counted.
Collections, charge-offs, judgments & liens: Judgments and tax liens may stay open on a repayment plan with 6 months of on-time payments (subordinated if recorded against the property); otherwise paid at closing (cash-out can pay them). Disputed collections of $250 or less can stay; other disputed accounts with derogatory history in 2 years must be removed and credit re-pulled.
Tradelines & credit depth: N/A
First-time homebuyer: Not allowed on the program
First-time investor: 12-month landlord history required unless LTV is 70% or less with DSCR above 1.00. Applicants must own a primary or investment property (can be waived if not a first-time homebuyer).
Foreign national: Not published – ask us about your scenario
ITIN borrower: Not published – ask us about your scenario
Non-permanent resident: Not published – ask us about your scenario
LLC / entity vesting: LLC (US) – all applicants sign individually; partnerships/corps
Gift funds & assets: N/A – stand-alone second (no down payment)
Financed property / exposure limits: 8 loans / $10M per borrower across the lender's programs; no more than 10% of a PUD/condo project.
Other borrower rules: N/A

Property

Eligible property types: 1-unit attached/detached, PUD, warrantable condo (max 80%); 2-4 units ineligible
ADUs & unpermitted additions: Multiple ADUs allowed if the appraiser states they're legally permitted and rentable with like-kind comps; ADU rent only if legal and legally rentable per the building department.
Non-warrantable condo: Not eligible (warrantable only).
Condotel: Not eligible.
Rural / acreage: Rural not eligible; agriculturally zoned not eligible; max 5 acres for DSCR.
Minimum square footage: 500 sq ft
Mixed use: No
5+ units / multi-property: No
Ineligible properties: N/A
Declining markets: 5% below the maximum LTV, plus credit-risk review.
Appraisal, review & insurance: Unpermitted additions case-by-case: appraiser must confirm workmanlike quality and no adverse marketability impact, and the addition gets no value. Declining market: 5% below max with credit-risk review. Escrow holdbacks up to 30 days/$25K on purchases (case-by-case).

Rental income

Rent used on a purchase: 100% market if vacant; lesser of lease or market
Rent used on a refinance: Lesser of lease or market; higher lease if 6+ mo remaining & 2 mo receipts; below-market leases can use market with intent letter
Vacant / unleased refinance: 90% of market rent if renovated within 6 mo & listed; seasoned investors without renovation: lesser of 65% or grid −5%
Short-term rental (Airbnb/VRBO): Yes
Short-term rental documentation: 12-mo income statement (not borrower generated) + listing + market/municipal proof; purchase uses lesser of 12-mo or 90% AirDNA/NAN; refi 25% vacancy factor, ≤10% decline
Short-term rental limits: DSCR 1.15; max CLTV 5% below grid

Refinance seasoning

Cash-out seasoning: 6 months ownership/title seasoning
Delayed financing (cash purchase recoup): N/A
Recently listed for sale: Refinance of a property listed in the last 6 months: must be delisted before funding with a motivation letter to keep it; cash-out gets extra review.

Other terms

Seller / interested-party concessions: Interested-party/financing contributions up to 6% at any LTV, limited to actual closing costs and prepaids.
Secondary financing: Second lien behind an institutional first. The first can't be in deferral/forbearance, negative-amortizing, a reverse mortgage, private, or have a balloon due during the second's term.
State & local restrictions: N/A

Additional details

Notes: Senior lien must be institutional; no forbearance, neg-am, reverse, private or early-balloon 1sts.

← LAMD-D40 · All programs · LAMD-D42 →