Understanding Property Condition: Why C5 and C6 are Ineligible

Rule

Properties with an appraiser-assigned condition rating of C5 (Severe Deferred Maintenance) or C6 (Substantial Damage/Structural Issues) are ineligible for the Lendency DSCR rental program. Properties must have a condition rating of C4 or better to qualify.

Lendency Insight

The DSCR program is designed for "stabilized" assets—properties that are ready to be rented or are already generating income. A C5 or C6 rating indicates that the property has issues that could affect its safety, soundness, or structural integrity (such as a failing roof, mold, or foundation cracks). These properties are not yet ready for a long-term "rental" loan. If you are looking at a C5 or C6 property, your best path is usually our Bridge/Fix & Flip product, which provides the capital to fix the issues so you can later refinance into a long-term DSCR loan once the property reaches C4 status.

Common Scenarios & FAQs

• Can I fix the issues before closing? Yes. If the appraiser identifies specific "subject to" repairs, and those repairs are completed and inspected (Form 1004D) before we close, we can proceed.

• What is a C4 rating? C4 means the property is functionally sound but may have some minor cosmetic wear. It is the "average" condition for most rental properties.

• Who decides the rating? A licensed, independent appraiser following the Uniform Appraisal Dataset (UAD) standards.

Key Definitions

• C-Rating: A standardized scale (C1 to C6) used by appraisers to describe the physical condition of a property.

• Stabilized Asset: A property that is in good repair and capable of generating consistent rental income.