DSCR appraisers assess condition on a scale (often C1-C6 in the appraisal industry, where C1-C4 is generally acceptable, C5-C6 is not). The lender's minimum is usually "average" condition or better - the property is functionally complete and habitable as-is.

Specific requirements: working electrical, plumbing, HVAC. No active leaks. No exposed wiring. Functional kitchen and bath. Sound roof. No structural settling beyond cosmetic. No active pest infestation.

"Cosmetically dated" is fine - old kitchen, worn carpet, dated paint don't disqualify. "Functionally deficient" does - missing fixtures, non-working systems, partial demolition state.

Roof issues: active leaks, missing sections, structural sag. Roof replacement before close required. Cost: $8-30K typical.

Foundation issues: visible settling, water intrusion, structural cracks. Engineering report required; remediation often $10-50K+.

Major systems failure: HVAC inoperable, electrical not to current code, plumbing leaks. Cost varies; usually $5-25K for repairs.

Pest infestation: active termite damage, rodent infestation. Treatment + repair required.

Mold: active mold growth requires professional remediation before close. Cost: $2-15K.

Distressed visible damage: broken windows, holes in walls, partial demo state. Typical of fix-and-flip acquisition condition.

For distressed acquisitions, DSCR is not the right product at purchase. Use a hard money / fix-and-flip loan to acquire and rehab. Then refinance into DSCR after the property reaches habitable condition AND you've seasoned title 6 months.

Total path: hard money (close 7-14 days) → rehab 30-90 days → tenant placement 30-60 days → DSCR refinance (close 21-30 days). Total cycle 4-8 months.

Fix-to-rent programs bundle this into one underwriting with the same lender - hard money + DSCR takeout pre-approved at the original close. Single application, two closings.

Mobile homes / manufactured homes NOT on permanent foundations. Limited lender pool even for permanent-foundation manufactured homes.

Properties in flood zones with non-standard insurance. Most DSCR lenders require standard NFIP-eligible properties.

Tiny homes under 400 sqft (some programs go to 500 sqft minimum). A few specialty programs accept smaller.

Log homes - some lenders OK, many decline. Verify before contracting.

Properties with deed restrictions limiting rental use. Owner-occupant-only deed restrictions block DSCR financing entirely.

Mixed-use with commercial space exceeding ~50% of value or square footage. Pushes into commercial multifamily underwriting.

Tier 1 (best pricing): detached single-family. Cleanest underwriting, most lender competition.

Tier 2 (slight rate adjust): attached single-family / townhomes. Most lenders treat similarly to SFR.

Tier 3 (modest adjust): warrantable condos. Condo questionnaire required - HOA review adds time.

Tier 4 (higher adjust): 2-4 unit multi-family. Slight pricing premium for additional appraisal complexity.

Tier 5 (premium pricing): non-warrantable condos, condotels, 5-8 unit small multifamily. Specialty lender pool, larger origination fees, longer underwriting timeline.