Short answer
Combined senior plus supplemental leverage and DSCR must satisfy the original tier tests; in-place value or NOI growth determines available proceeds.
What controls supplemental sizing?
Combined leverage cannot exceed the original tier maximum (e.g. 75 percent LTV on tier 2). Combined DSCR must meet or exceed the original threshold using the higher post-supplemental debt service. Most supplementals use the lender's updated appraisal and trailing twelve NOI to recalculate.
When does it beat refinance?
When the in-place senior rate is meaningfully below current market and yield maintenance would be punitive on a full payoff. Supplemental preserves the favorable senior rate and adds incremental proceeds. When the senior is already at-market or above-market, full refinance is usually cheaper all-in.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current