LAMD-D43 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 680 (FN: no score or 680)
Max LTV – purchase: Piggyback only: 75% CLTV (720+, ≤$350K)
Max LTV – rate/term refinance: 75% CLTV (720+, ≤$350K); 70% ($500K)
Max LTV – cash-out refinance: Same CLTV grid
Minimum loan amount: $50K
Maximum loan amount: $500K; max combined $4.0M
Cash-out (cash in hand) limit: Not published – ask us about your scenario
LTV reductions & overlays: Combined LTV: 720+ 75% to $350K, 70% to $500K; 700–719 70% to $450K, 65% to $500K; 680–699 65% to $350K, 60% to $450K. Foreign nationals 70% (no FICO or 720) down to 60%. Florida new-construction PUD 75%, condo 70% (investment).

DSCR requirements

Minimum DSCR: 1.00
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Combined first and second payments must produce a DSCR of 1.00 or higher.

Products & terms

Products: Closed-end second
Interest-only: Not published – ask us about your scenario
Prepayment penalty: Investment only, per state
Reserves: Purchases only: 3 months up to $1M, 6 months $1M–$2M, 12 months above $2M (total financing).

Borrower & credit

Housing payment history: 0x30x12 and 0x90x24. Payments on a manufactured home or second mortgage count as mortgage history.
Credit events (BK, foreclosure, short sale, modification): Bankruptcy, foreclosure, short sale, deed-in-lieu, loan modification, forbearance, deferral and 120+ day lates all count as credit events and need 48 months (bankruptcy measured from discharge/dismissal to closing). More than one bankruptcy in 7 years requires 7 years from the latest.
Forbearance, deferrals & modifications: Forbearances, deferrals and modifications are credit events (48 months). Exception: after a COVID-19 forbearance the borrower is eligible once 3 consecutive on-time payments are made by the note date.
Collections, charge-offs, judgments & liens: Collections/charge-offs under 24 months old may stay open up to $2,000 total; 24+ months up to $2,500 each; time-barred and all medical collections may stay open. On the DSCR grade, any balances above those limits must be paid in full.
Tradelines & credit depth: N/A
First-time homebuyer: Not published – ask us about your scenario
First-time investor: Not published – ask us about your scenario
Foreign national: Yes – investment, 70% CLTV
ITIN borrower: No
Non-permanent resident: Yes
LLC / entity vesting: Individual or LLC/corporation with up to 4 owners, all of whom must be borrowers and guarantors.
Gift funds & assets: Limited by program
Financed property / exposure limits: No limit on other financed properties. Lender exposure: $5M or 10 loans per borrower within any 6-month span.
Other borrower rules: N/A

Property

Eligible property types: SFR, PUD, 2-4, warrantable & non-warrantable condo
ADUs & unpermitted additions: Follows the first-lien rules: one ADU allowed; unpermitted ADUs acceptable if excluded from value with no title violations; ADU rent only if zoning-legal.
Non-warrantable condo: Warrantable and non-warrantable condos eligible under a limited review: single-entity ownership up to 2 units in 5–20 unit projects or 30% in 21+ units; commercial space up to 50%; other features case-by-case. Review waived for detached units and 2–10 unit projects (not condotels). Minimum DSCR 1.00 for condos. Florida new-construction condos capped at 70%.
Condotel: Not listed as eligible for the second-lien program.
Rural / acreage: Not listed as an eligible property type for seconds.
Minimum square footage: 500 sq ft living space
Mixed use: Not published – ask us about your scenario
5+ units / multi-property: No
Ineligible properties: C5/C6 or fair/poor condition, Q6 construction, under 500 sq ft (each unit), model leasebacks, private transfer covenants, commercial, co-ops, domes, geothermal homes, timeshares, over 10 acres, unique properties, assisted living, working farms/ranches/orchards, mobile and manufactured homes, 5–8 units, mixed use, incomplete properties, barndominiums. Leaseholds are case-by-case (never tribal land). Every unit needs a full kitchen with a stove or stove hookup.
Declining markets: N/A
Appraisal, review & insurance: Full appraisal supported by an AVM; loans of $250K or less may use an AVM plus property condition report if a second AVM supports it. Appraisal valid 360 days. Points and fees under 7%.

Rental income

Rent used on a purchase: Lease or 1007/1025; new lease with 2 mo payments
Rent used on a refinance: Lease or 1007; lease >125% of 1007 capped at 125% unless 2 cancelled checks support
Vacant / unleased refinance: Allowed – max 70% CLTV
Short-term rental (Airbnb/VRBO): Not published – ask us about your scenario
Short-term rental documentation: 12-mo STR agreement average, 1007 (STR), or purchase-only AirDNA Rentalizer (occupancy ≥60%) – all at 75%; STR addendum; not in VT or NYC boroughs (except condotels)
Short-term rental limits: 75% of STR income used; refi STR not allowed if under long-term lease

Refinance seasoning

Cash-out seasoning: Existing first mortgage must be 6+ months old. Under 6 months on title only with delayed financing, a no-value quitclaim within 12 months (max 65%), inheritance/divorce award, or time in the borrower's majority-owned LLC or revocable trust. 6–12 months: −5% from the grid, renovations must justify the value, and if listed after purchase value is the lower of list price or appraisal.
Delayed financing (cash purchase recoup): Cash purchases within 6 months: treated as cash-out; loan capped at total cash investment (price plus documented improvements); value is the lower of appraisal or cost; gifts used to buy can't be reimbursed.
Recently listed for sale: Rate/term: must be off the market by application. Cash-out: not listed within 6 months of application. Investment property listed within the past 12 months requires a 36-month prepayment penalty that can't be bought down (unless the state prohibits prepays).

Other terms

Seller / interested-party concessions: 6% at CLTV of 80% or less, 4% above. Not allowed when the purchase price exceeds list price by 3% or $5,001.
Secondary financing: This is a closed-end second lien behind an existing first ($50K–$500K, total combined loans up to $4M). Purchases only as a piggyback with a new first.
State & local restrictions: Investment seconds not available in Hawaii, Minnesota, Philadelphia County PA or USVI; Texas 50(a)(6) prohibited.

Additional details

Notes: Investment grid 720+: 75% ($350K)/70% ($500K); 700–719: 70% ($450K)/65% ($500K); 680–699: 65% ($350K)/60% ($450K). Excluded for investment: HI, MN, Philadelphia, VI. Appraisal w/ AVM support (≤$250K AVM+PCR).

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