SBC
A commercial lender requires special-form building coverage at 100% of the insurable value of the improvements (or the unpaid principal balance on an agreed value basis), claims paid on a replacement cost basis, a deductible no greater than 10% of the insured value of the building for all perils, coinsurance at 80% or higher or an agreed amount endorsement, and general liability at $1MM per occurrence and $2MM aggregate per location. Flood coverage applies in a special flood hazard area, and the lender must be named as mortgagee, loss payee and additional insured on the correct ACORD forms. This is a closing-delay topic: get the requirements to your agent before the binder is ordered.
September 1, 2026
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A judgment or collection matters on a commercial loan file only if it is material, and our program defines material for judgments at $5,000 or more. A charge-off is tested on two axes instead of one: it disqualifies only when it is $5,000 or more and less than 12 months old. That difference means age cures a charge-off but does nothing for an unpaid judgment. This page explains the thresholds, what has to be resolved versus what can remain open, and where the commercial rules diverge from the 1-4 unit DSCR program.
September 1, 2026
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You can put several small residential properties under one commercial loan only if they are contiguous. A bulk residential portfolio whose properties are scattered across different blocks or neighborhoods is a named ineligible property type on our small balance commercial program. A contiguous portfolio has its own category, requires a commercial component on at least one parcel, and is valued as a single entity rather than as the sum of individual house values. Scattered houses are not a dead end, but they belong on a different guideline.
September 1, 2026
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Tax escrow is required on every loan and collected at closing. Insurance escrow is collected on most loans, but is not required if the policy is a blanket policy covering other properties or the operation of the business, or if the borrower requests a waiver and the FICO is 700 or higher. Our minimum FICO is 650 for the primary guarantor and 640 for others, so a waiver asks for meaningfully stronger credit than approval does. A waiver does not save you the year-one premium, which must be paid in full at closing either way.
September 1, 2026
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One category of criminal record makes a borrower ineligible in our small balance commercial program: a felony conviction related to financial fraud, where the release date falls within the past ten years. That is the entire criminal-history rule. The background search runs on every file and covers all parties who control the borrower, anyone owning 25% or more directly or indirectly, and every entity in the ownership chain. This page states the rule exactly and is equally clear about what the guideline does not say.
September 1, 2026
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Automotive is an eligible Tier II property type under our small balance commercial program, including shops performing major mechanical work. What disqualifies a property is narrow and specific: a gas dispenser or underground storage tank, a purpose-built quick-lube or an oil-change facility with a below-ground pit, and a used-car lot whose land-to-building ratio reads as a land loan. Every property is screened by an Environmental Transaction Screen that reviews current and historical uses, and equipment and business value are excluded from the appraised value the loan is sized against.
September 1, 2026
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Rent-controlled and rent-stabilized properties in New York are ineligible collateral under our small balance commercial program, for both Multi-Family and Mixed-Use. Separately, an individual cannot be the borrower on a New York property at all, and New Jersey carries a narrower version of the same restriction at six units or fewer. Here is what each rule reaches, and why regulated rent caps the value along with the income.
September 1, 2026
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On a building with five or more residential units, units used for short-term rental are deemed vacant. The income does not help you qualify, and the units count against the 75% occupancy the property must clear, measured over the 90 days before you apply. That is the opposite of the 1-4 unit investor side, where short-term rental income is usable at a discount. The dividing line is the unit count, not the behaviour.
September 1, 2026
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One 30-day late mortgage payment does not disqualify you. Our small balance commercial guideline allows no more than one mortgage late in the last 12 months, or two in the last 24, on a residential and/or subject property mortgage — the standard written in shorthand as 1x30 and 2x30. This page decodes that notation, identifies which mortgages get counted and whose history is tested, explains how the history is verified, and sets out what happens when a file is over the line.
September 1, 2026
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An outstanding tax lien does not automatically disqualify a commercial loan. Our guideline gives it three ways through: payoff at closing, an established payment plan with at least six months of payment history, or an outstanding amount under $2,000. This page explains the threshold, what the payment plan has to show, and why a lien recorded on title is a separate gate from a lien filed against the guarantor personally.
September 1, 2026
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Medical collections do not stop a DSCR loan, and they do not have to be paid off. Our DSCR guideline allows medical collections to remain outstanding if the balance is less than $10,000 in aggregate. Judgments, tax liens, charge-offs and past-due accounts are treated very differently and generally must be satisfied or brought current before or at closing. This page gives the exact thresholds, what documentation clears each item, and where the guideline is silent.
September 1, 2026
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A completed foreclosure, a deed-in-lieu or a short sale carries a three-year waiting period on our DSCR program. All three are treated identically, and the clock runs from the date the event finished, not the date you stopped paying. A recorded notice of default or pre-foreclosure sale carries its own 36-month look-back even if nothing was ever lost, and a written explanation is required for a full year after the waiting period has run out.
September 1, 2026
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A lease with a term of three years or longer makes a 1-4 unit investor property ineligible under our DSCR program. It is a flat no, not a pricing hit or an LTV reduction, and the guideline states it in one line without giving a reason. This page covers the rule, the lease provisions it sits next to, why commercial property treats long leases as an asset instead, and what to do if you have already signed one.
September 1, 2026
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A 1-4 unit property occupied under a rent-to-own, lease-purchase or lease-option arrangement is not eligible for our DSCR program. The guideline says so twice: rent to own and contract for deed are ineligible as leases, and leasing with purchase option properties are an ineligible property type. The option is a collateral problem, not a paperwork problem, so a cleaner second lease does not fix it. This page covers where the rule comes from, how it interacts with the eligible-tenant and occupancy rules, and the three realistic paths open to a landlord who already has a rent-to-own tenant.
September 1, 2026
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A student rental qualifies on our DSCR program only if four conditions are met at once: every lease is annual, every lease carries a parent guarantee, all leases share the same start and end date, and the property sits less than 5 miles from a local college or university. Meet all four and the property is permitted with a 5% reduction in the maximum LTV from the eligibility grid. Miss the annual term and you land in the short-term lease bucket at 60% LTV instead. This page covers by-the-room versus whole-house leasing, the summer appraisal trap, and what the guideline does not say.
September 1, 2026
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An expired lease still works as rent evidence on a DSCR refinance if it contains language converting the tenancy to month-to-month at expiry. With that clause, no rental receipts are required. Without it, and without a signed extension, the program asks for three months of proof of rental receipt instead. Here is how to tell which path your file is on before the appraisal is ordered.
September 1, 2026
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Not while you are still holding it. Under the DSCR program guidelines, virtual currency is not permitted unless it is converted to U.S. currency and deposited into an eligible asset account, with documentation showing the funds came from a digital currency account you own. There is no haircut schedule for crypto, because crypto in its native form has no admissible value on the file. The hard part is what happens next: a six-figure deposit from an exchange lands squarely inside the large-deposit sourcing rules.
September 1, 2026
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Funds held in a business account can be used for the down payment, closing costs and reserves on a 1-4 unit investment property loan. If the account is not in the borrowing entity name, two conditions attach: a natural borrower or guarantor must own 25% or greater of the company holding the account, and must either be named on the account or provide proof of access to 100% of the funds from other members. This page walks both conditions, the documentation that satisfies them, and what happens when you share the business with partners.
September 1, 2026
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There is no dollar threshold that makes a deposit "large" on a 1-4 unit investor file. The test is whether the deposit is inconsistent with your own monthly deposit activity in the account funding your down payment, closing costs, or reserves. Unverified funds are not acceptable, and several sources are ineligible no matter how well you document them. This page covers what triggers the request, what documentation closes it, and how to prepare an account so it never arrives.
September 1, 2026
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The No Doc Streamline program requires a 700 minimum FICO and a 600 Optic Score, caps leverage at 75% LTV on a purchase and 70% on a rate-and-term or cash-out refinance, and tests the property at 1.00x DSCR using the rents the appraiser used to derive value. It is available on both investor and owner-occupied properties, and market rents are used for qualification in all cases. No personal or business tax returns are required, but the credit, asset, reserve and entity documentation still is. A file that misses coverage under the complete or bank statement program may be converted to No Doc and adjusted to these guidelines.
September 1, 2026
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