Are DSCR loan rates higher than conventional rates?

Usually a little higher for the same borrower, because the lender is taking a different risk and isn't checking your income. Ours start from 6.375%. The gap is often smaller than the cost of a deal that falls through while a bank underwrites you.

Can I refinance from a DSCR loan into a conventional loan later?

Often, yes, if you qualify on your income at that point and the loan is in your personal name. Check the prepayment terms on the DSCR loan first.

Which is better for a first rental?

If you have strong documented income and time, a conventional loan is usually cheaper. If you're self-employed, buying in an LLC, or need speed, a DSCR loan is the more practical route.

Can an LLC get a conventional loan?

Generally not. Conventional loans are made to individuals. A DSCR loan can close in an LLC's name.

Comparison

DSCR Loan vs Conventional Loan: Which Fits Your Rental?

Both can finance a rental. One qualifies you on your income, the other on the property's rent. Here's how they differ on paperwork, cost, speed and limits, and how to pick.

By Joseph Snado · Published October 11, 2026

Quick comparison

A DSCR loan qualifies on the property's rent covering its payment; a conventional loan qualifies on your income, your debts and your tax returns. For an investor who is self-employed, already carries several mortgages, or buys in an LLC, a DSCR loan is usually the practical choice. For a buyer with strong documented income and time to wait, a conventional loan is usually cheaper.

DSCR loan vs conventional loan for an investment property
	DSCR loan	Conventional loan
Qualifies on	The property's rent covering its payment	Your income, debts and tax returns
Paperwork	ID, contract, proof of funds, lease	Two years of tax returns, pay stubs, W-2s, bank statements
Down payment	At least 20% with us	Typically 15% to 25%
Rates	Usually a little higher; ours from 6.375%	Usually lower for the same borrower
Borrow in an LLC	Yes	Generally no
Property limit	No hard cap with us	Generally ten financed properties, often fewer
Time to close	About 14 business days	Often 30 to 45 days
Property type	Investment property only	Your home or a rental

How you qualify

This is the real difference. A conventional lender underwrites you. It adds up your income from tax returns and pay stubs, adds up your debts, and checks that the new payment fits inside a debt-to-income limit. If you're self-employed, write off a lot, or already carry several mortgages, that math often fails even when the deal is good.

A DSCR lender underwrites the property. It compares the rent with the full monthly payment, meaning principal, interest, taxes, insurance and any HOA dues. If the rent covers the payment, the property supports the loan. Your credit and down payment still matter, but your income never enters the calculation.

In dollars: a property renting for $2,000 a month with a full payment of $1,850 covers the payment with $150 to spare. A DSCR lender sees a loan that works. A conventional lender sees the same property but asks a different question: can you afford it on your income after your other debts?

See the full DSCR loan requirements

Rates and costs

Conventional loans are usually the cheaper option on rate, because they're sold into the agency market and priced for borrowers who've proven their income. DSCR loans are priced by private lenders for a different kind of risk, and the rate is usually somewhat higher for the same borrower. Our DSCR rental loans start from 6.375%, as of October 2026.

Costs are closer than people expect. Both loans carry an appraisal, title and closing costs. The difference most investors notice is time and hassle, not fees: a DSCR file is shorter to assemble and closes faster, which matters when a seller has other offers.

Property and loan limits

Conventional investment loans follow agency rules. The property has to be one you'd be eligible to own personally, the loan has to be in your name, and there's a cap on how many financed properties you can have, generally ten. Many banks apply their own, lower limit.

DSCR loans are more flexible. With us the property can be a single-family home, a condo, or a 2 to 4 unit building, including short-term rentals. The loan can close in an LLC. There's no hard cap on the number of properties, so investors scaling a portfolio don't hit a wall. Loan size is set deal by deal and confirmed on a short call.

Which one fits your deal

A simple way to decide:

Choose a conventional loan if you have strong, documented W-2 income, few other mortgages, and time to wait for the lowest rate.
Choose a DSCR loan if your tax returns understate your income, you already own several financed properties, you want to hold the property in an LLC, or you need to close in weeks rather than months.
Choose a DSCR loan if the property is a short-term rental, which many conventional lenders won't count income from.
Either way, make sure the rent covers the full payment. A rental that only works because of your salary is a thin deal.

Check the rent against the payment in the DSCR calculator

FAQ

Questions, answered

No. A conventional loan follows Fannie Mae and Freddie Mac rules and qualifies you on your income. A DSCR loan is a non-QM loan from a private lender that qualifies on the property's rent.

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Tell us about the property and we will come back to you with options — usually within 24 to 48 hours.

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