LAMD-D44 DSCR Closed-End Second | DSCR Guidelines

Loan limits

Lien position: Second lien (closed-end)
Minimum credit score: 700 (no borrower mid-score <660); highest mid-score qualifies
Max LTV – purchase: N/A – concurrent closing ineligible
Max LTV – rate/term refinance: 75% CLTV (720) / 70% (700)
Max LTV – cash-out refinance: 75% CLTV (720) / 70% (700)
Minimum loan amount: $100K
Maximum loan amount: $350K; combined $3.5M
Cash-out (cash in hand) limit: See program rules
LTV reductions & overlays: Combined LTV: 75% at 720+, 70% at 700 ($100K–$350K). 3–4 units 65%. Declining market 70%. Listed for sale 6–12 months ago with a prepay 70%. Inherited/non-purchase acquisitions 60%.

DSCR requirements

Minimum DSCR: 1.00 – lease required
DSCR below 1.00: No
No-ratio (no DSCR calculated): No
How DSCR and qualifying rent are calculated: Minimum 1.00 including both first and second liens; a lease must be in place (standard rent rules).

Products & terms

Products: 10/15/20/30yr fixed, fully amortizing
Interest-only: No
Prepayment penalty: Investment only
Reserves: Rate/term: 3 months of combined first and second PITIA.

Borrower & credit

Housing payment history: 0x30x12 with a 12-month housing history.
Credit events (BK, foreclosure, short sale, modification): 4 years for short sale, foreclosure, DIL, default modification, NOD, 120+ day late or a single bankruptcy; multiple events ineligible.
Forbearance, deferrals & modifications: A natural-disaster or non-financial-hardship forbearance/deferral on the primary or subject must be completed with 2 payments made since (purchase or rate/term) or 6 payments (cash-out); the deferred balance can be paid off by the refinance. A primary residence currently in forbearance is ineligible; one other REO in forbearance is OK.
Collections, charge-offs, judgments & liens: Judgments and liens affecting title must be paid. Non-title charge-offs/collections open under 2 years and over $10,000 (individually or combined) must be paid. Medical collections under $50,000 can remain. IRS payment plans OK if current and not liened. Borrowers in credit counseling or debt management are not eligible; no private credit-repair companies.
Tradelines & credit depth: N/A
First-time homebuyer: No
First-time investor: See program rules
Foreign national: No
ITIN borrower: No
Non-permanent resident: No
LLC / entity vesting: LLC vesting allowed with 25% ownership; no POA.
Gift funds & assets: Purchase only, from family. Under 75% LTV no borrower contribution needed; above 75% the borrower must show 5% of their own funds (doesn't have to use them). Not for reserves. Gift of equity from family allowed up to 70% with a 0x30x12 seller mortgage, tenant in place and DSCR 1.00+.
Financed property / exposure limits: Lender exposure: $5M or 10 loans per borrower/guarantor; 3+ loans in one complex or subdivision case-by-case.
Other borrower rules: US citizens and permanent residents (no non-permanent residents, DACA, ITIN or foreign nationals). DSCR minimum FICO 700 (no borrower under 660).

Property

Eligible property types: SFR, 2-4, PUD, townhome, warrantable condo
ADUs & unpermitted additions: Follows the first-lien DSCR rules (permitted ADU rent with comps and lease; unpermitted ADUs acceptable but no rent).
Non-warrantable condo: Warrantable condos only.
Condotel: Not eligible.
Rural / acreage: Rural ineligible; max 2 acres.
Minimum square footage: 500 sq ft per unit (program rules)
Mixed use: No
5+ units / multi-property: No
Ineligible properties: Manufactured homes, mixed use, condotels, co-ops, rural/agricultural zoning, mandatory rental pools, live/work condos, log homes, domes, unique properties, working farms, boarding houses/room leases, assisted living, timeshares/fractional, tenants-in-common, 'shouses', builder model leasebacks and inventory, under construction, C5/C6, commercial or industrial zoning (except condos), zoning violations, Native American leased land, lava zones (unless meeting Fannie Mae), leased land not exceeding the loan term by 5 years, community land trusts. Under 500 sq ft per unit (no kitchenettes). Mandatory club fees over 10% of price ineligible. Properties near power plants, industrial factories or environmental hazards ineligible.
Declining markets: N/A
Appraisal, review & insurance: Up to $400K: AVM with 90% confidence plus a property condition inspection (full appraisal if confidence is lower or HPML); over $400K full appraisal. No desk review needed.

Rental income

Rent used on a purchase: N/A
Rent used on a refinance: Per standard tier 'Rent Qualification'
Vacant / unleased refinance: Not eligible – lease required
Short-term rental (Airbnb/VRBO): No
Short-term rental documentation: N/A
Short-term rental limits: Short-term rentals ineligible.

Refinance seasoning

Cash-out seasoning: Owned at least 6 months; paying off an existing second requires 12 months of seasoning.
Delayed financing (cash purchase recoup): Allowed for cash purchases owned under 6 months (arm's length, documented funds); priced as cash-out; LTV on the lower of price or appraisal; gift funds can't be recouped.
Recently listed for sale: Can't be listed at application. Seasoning runs from listing removal to the note date; LTV uses the lower of appraisal or lowest list price in the last 12 months. Rate/term without a prepay: not permitted within 6 months, pre-approval for 6–12 months; with at least a 2-year prepay: permitted. Cash-out without a prepay: not permitted within 6 months (70% max with pre-approval at 6–12 months); with a 2-year prepay: 70% max.

Other terms

Seller / interested-party concessions: Up to 6% of the purchase price for closing costs and prepaids only (no cash credit); excess is deducted from price.
Secondary financing: Closed-end second behind an existing first (no third-position subordinations). Ineligible firsts: seasoned under 6 months, ARMs (unless qualified at the life cap and fixed 36+ months), balloons, HELOCs, 40+ year original terms, active forbearance, IO with under 5 years of IO left, negative amortization, private-party, PACE, reverse mortgages.
State & local restrictions: Texas 50(a)(6) ineligible.

Additional details

Notes: Declining market 70%; 3-4 unit 65%; inherited/non-purchase acquisitions 60%; listed for sale 6–12 mo ago w/ PPP 70%. TX 50(a)(6) ineligible. 1st lien must be seasoned ≥6 mo; no HELOC, balloon or private-party 1sts. the program CES file is the same program.

← LAMD-D43 · All programs