Non-QM
I have an investor looking to buy a 2-family in NJ for $1M, 15% down, 740 credit. What DSCR options are available?
No DSCR program in the guidelines reviewed will approve 85% LTV on a 2-unit NOO property in NJ at this loan amount. The binding constraint is the combination of property-type overlays (2–4 unit LTV caps) and NJ state-level restrictions, reducing the best available outcome to 80% LTV (Nations Direct Ignite Express) — requiring a minimum of 20% down, not 15%.
Critical LTV Constraint — 2-Unit NOO in NJ
- Every program reviewed imposes a property-type overlay that reduces maximum LTV below 85% for 2–4 unit NOO properties.
- Several programs layer an additional NJ state overlay (typically capping purchase LTV at 75%), compressing options further.
- The loan amount on this scenario is $850K (85% of $1M), placing it in the ≤$1,000,000 tier across all matrices.
Program-by-Program Breakdown
Nations Direct — Ignite Express DSCR (Best Available: 80% LTV)
- Standard matrix at 740 FICO / ≤$1M / DSCR ≥ 1.00 = 85% purchase LTV, but the 2-unit property overlay applies: "2-4 Units, Warrantable and Non-Warrantable Condos — Purchase/Rate and Term Maximum LTV 80%; Cash Out Maximum LTV 75%."
- No NJ state LTV overlay identified on this program. NJ is listed as a no-licensing-required state.
- Reserves: 6 months PITIA required on loan amounts $500,001–$1,500,000.
- Bottom line: Max 80% LTV — 20% down required. Best available option in this scenario.
JMAC Lending — Newport DSCR (80% LTV — No Explicit 2-Unit Cap, NJ Entity Restriction)
- 2–4 unit listed as eligible property type. Matrix at 740 FICO / ≤$1M / DSCR ≥ 1.00 shows 80% purchase LTV. No explicit 2-unit LTV reduction cited in the matrix section.
- NJ state restriction: "NJ: restricted to LLCs and Corporations only."
- Reserves: No reserves required on loan amounts ≤$1.5M.
- Bottom line: Max 80% LTV (matrix-driven, no explicit 2-unit overlay reduction found); loan must close in LLC or Corp in NJ — 20% down required.
JMAC Lending — Venice DSCR (75% LTV)
- Property type overlay: "Property Type restrictions (Condo, Non-warrantable & 2-4 Units) Purchase: 75% R&T and Cash-Out max 70%."
- Additional NJ/Product Code 110 state overlay: Purchase max 75%; Refi 70%; Max Loan Amount $2MM.
- Bottom line: Max 75% LTV — 25% down required.
JMAC Lending — Prime DSCR (75% LTV)
- Property type overlay: "Property Type restrictions (Condo & 2-4 Units) Purchase: 75% R&T and Cash-Out max 70%."
- Standard matrix at 720+ FICO / ≤$1M / DSCR ≥ 1.50 = 80% purchase LTV, reduced to 75% by 2-unit overlay.
- DSCR ≥ 1.00 minimum required.
- NJ prepay: Prepayment penalties not allowed on loans vested to individuals in NJ; must close under C-Corp or S-Corp.
- Bottom line: Max 75% LTV — 25% down required.
Greenbox — Elite DSCR (75% LTV — NJ State Override)
- 2-unit property overlay: "2 Units: Max 80% LTV."
- NJ state overlay overrides: "CT, FL, IL, NJ, and NY: Max 75% LTV Purchase / 70% LTV Refinance, Max Loan Amount: $2,000,000."
- Minimum DSCR: 0.75x — most flexible coverage threshold available.
- Reserves: 2 months PITIA on loans ≤$1.5M.
- Bottom line: NJ state overlay caps purchase at 75% LTV — 25% down required, despite 80% 2-unit baseline.
Greenbox — Elite Plus DSCR (75% LTV — NJ State Override)
- NJ state overlay: "CT, FL, IL, NJ, and NY: Max 75% LTV Purchase / 70% LTV Refinance. IL and NY: 2-4 Units Not Eligible."
- Standard matrix at 720 FICO / $150K–$1.5M = 80% purchase LTV, reduced to 75% by NJ overlay.
- DSCR ≥ 1.00 minimum required — sub-1.00 not eligible.
- Bottom line: Max 75% LTV in NJ — 25% down required.
Nations Direct — NonQM Express DSCR (75% LTV)
- 2-unit and NJ overlay: "2-4 Units, Warrantable and Non-Warrantable Condos — Maximum LTV 75% Product Code 110 Only: Maximum LTV Purchase 75%; Refinance 70%."
- Bottom line: Max 75% LTV — 25% down required.
Mega Capital — Expanded DSCR (75% LTV)
- Property type overlay: "2–4 Unit Properties – Max. LTV is 75%."
- Standard matrix at 720 FICO / ≤$1M = 80% purchase LTV, reduced to 75% by overlay.
- Reserves: 6 months required. NJ prepay: "NJ: Prepayment Penalties are only allowed on loans made to an S-Corp or C-Corp."
- Bottom line: Max 75% LTV — 25% down required.
Forward Lending — All DSCR Programs (Not Eligible)
- Matrix note: "2-4 Unit – NA" applies across all program tiers (Select, Core, Fusion, Sub1, No Ratio).
- NJ prepay restriction also present: "Not allowed in: NJ*, NM. Allowed to close in the name of a Corp."
- Bottom line: 2–4 unit properties ineligible across all Forward Lending DSCR tiers.
Summary Table
| Lender / Program | Max Purchase LTV (NJ, 2-Unit) | 740 FICO Eligible | Key Constraints |
|---|---|---|---|
| Nations Direct — Ignite Express DSCR | 80% | Yes | 6 months reserves; best available LTV |
| JMAC — Newport DSCR | 80% | Yes | No explicit 2-unit cap found; LLC/Corp required in NJ; no reserves ≤$1.5M |
| Greenbox — Elite DSCR | 75% | Yes | NJ state overlay overrides 80% 2-unit baseline; DSCR as low as 0.75x |
| Greenbox — Elite Plus DSCR | 75% | Yes | DSCR ≥ 1.00 required; NJ state overlay |
| JMAC — Venice DSCR | 75% | Yes | Product Code 110/NJ overlay |
| JMAC — Prime DSCR | 75% | Yes | DSCR ≥ 1.00; C-Corp/S-Corp for NJ prepay |
| Nations Direct — NonQM Express DSCR | 75% | Yes | Product Code 110/NJ cap |
| Mega Capital — Expanded DSCR | 75% | Yes | 6 months reserves; S-Corp/C-Corp for NJ prepay |
| Forward Lending — All DSCR Programs | Not Eligible | N/A | 2-4 unit listed as NA across all tiers |
Conditions and Follow-Up Items
- Down payment: Advise the investor that 15% down (85% LTV) is not achievable. Minimum 20% down (Nations Direct Ignite Express or Newport DSCR); 25% down at all other eligible programs.
- NJ entity requirement: Most programs restrict prepayment penalties on individually-vested loans in NJ. If the investor wants a prepayment penalty structure (or in some cases, to close at all), the loan must be in an LLC, Corp, S-Corp, or C-Corp depending on the lender. Confirm with investor early.
- DSCR coverage: Confirm gross monthly rents vs. PITIA on the proposed $850K loan before selecting a program. Greenbox Elite DSCR allows DSCR as low as 0.75x; most others require ≥ 1.00.
- Appraisal: A FNMA 1025 Small Residential Income Property Appraisal Report is standard for 2-unit investment properties across most DSCR programs.
- Newport DSCR 2-unit LTV: No explicit 2-unit LTV overlay was identified in the Newport matrix — confirm with JMAC directly whether a separate property-type restriction applies before relying on the 80% LTV.
