- Product Type
- 30yr & 15yr Fixed Rate
- Interest Only
- 30yr Am · First 10 years I/O then converts to a 20-year fixed rate. Qualify DSCR based off the I/O payment.
- First Time Investor & FTHB
- Not Allowed
- Property Lease Requirements
- Use lower of estimated market rent or lease agreement
- Copies of any existing leases must be provided (both purchase and refi transactions)
- Short-Term Rental (STR) not allowed on 2-8 Unit Mixed Use program
- Vacancy
- If the vacancy is on a residential unit it must be actively marketed for rent — use 75% of market rents
- Max 1 vacant with 2-3 Units, 2 vacant on 4-8 Units
- Vacant commercial space is Not Allowed
- New leases must have a 12-month agreement and proof of deposit for 1st and last months' rent as well as the security deposit
- Non-Arm's Length
- Not Allowed
- Cash-In-Hand
- Max: $1,000,000
- Occupancy
- Investment (Business Purpose) — borrowers cannot occupy any of the units.
- Eligible Borrower
- U.S. Citizen, Permanent Resident Alien, Non-Permanent Resident Alien. OFAC sanctioned countries are Not Allowed.
- Calculating DSCR — Refinance
Refinance (Long Term Rental – LTR) Income Only
Standard Calculation Method:
- Monthly gross rent should be evaluated for each unit individually
- Executed lease agreement / leases converted to month-to-month are allowed
- If lease agreement is not provided, LTV/CLTV is limited to the lesser of 70% or the Max LTV/CLTV allowed per the TQL DSCR Matrix
- Monthly Gross Rents are determined using the lower of the actual lease amount or estimated market rent from Form appraisal. If using the lower, nothing further is required.
- If using a higher actual lease amount, evidence of 2 months of receipt is required; if the current lease amount is >120%, the allowed monthly rent will be capped at 120%
- Units subject to rent control or housing subsidy must utilize current contractual rent to calculate DSCR
- Calculating DSCR — Purchase
- Monthly gross rent should be evaluated for each unit individually
- Executed lease agreement / leases converted to month-to-month are allowed. Assignment of Lease must be clearly listed on each agreement.
- If lease agreement is not provided, LTV/CLTV is limited to the lesser of 70% or the Max LTV/CLTV allowed per the TQL DSCR Matrix
- Monthly Gross Rents are determined using the lower of the actual lease amount or estimated market rent from Form appraisal
- Property Seasoning
- Rate/Term Refinance: 6 months · Cash-Out Refinance: 12-month seasoning required
- 2-8 Unit Property Type Details
- Mixed Use & Residential Mixed Use 2–8 Unit
- Commercial usage limited to Retail / Office / Restaurant
- 2–3 Unit: Max 1 commercial unit
- 4–5 Unit: Max 2 commercial units
- 6–8 Unit: Max 3 commercial units
- Commercial space must not exceed 50% of the total building's usable area
- Vesting
- LLC or Corporation only. Must have at least 1 Personal Guarantor with at least 25% ownership interest and a delegated right to act on behalf of the Company without other members' approvals.
- Acreage / Rural
- Max 2 acres. Rural property Not Allowed.
- Appraisal / Property Valuation
- FHLMC 71A, FHLMC 71B, FNMA 1050 or similar short form used to appraise 5+ residential properties
- Narrative report can be utilized but not required for 2-8 Mixed Use
- General Purpose Commercial Forms (e.g., GP Commercial Summary Form available from CoreLogic a la mode)
- Rent Roll or Operating Statements (Income & Expense reports)
- Appraiser must be certified with 2+ years experience on these property types and carry $1M E&O policy
- Review — commercial sales and income BPO or second appraisal
- PA & NC must use a full commercial evaluation product instead of a commercial BPO